We all know Canada, because of its sheer land size, has regional differences from the West Coast to Ontario and from Quebec to the eastern provinces. If you’re from Vancouver, travelling to Prince Edward Island can feel like you’re visiting another country. Newfoundland and Labrador, New Brunswick, Nova Scotia
and P.E.I. make up Atlantic Canada, and we take a closer look at what the mortgage market is like on the East Coast and what the differences may be compared to other parts of the nation.
Mix of city and rural
In 2009, the Atlantic provinces’ population totalled more than 2.3 million, which is just under Toronto’s 2.5 million. This makes the region a considerably smaller market comparatively. Much of it is considered small town but brokers living within the major city centres, such as Halifax in Nova Scotia; Fredericton, Moncton and Saint John in New Brunswick; and St. John’s in Newfoundland, don’t find working there that different from other fair-sized Canadian municipalities.
What may be the one difference is that in the Atlantic cities, the housing market is stable and doesn’t experience the boom-and-bust bubbles that much of Canada is always preoccupied with. “You don’t get the ups and downs. Things are very consistent,” says Don MacVicar, president of the Premiere Mortgage Centre, based in Halifax, with brokers in Nova Scotia, New Brunswick, Newfoundland and Labrador and Ontario.
He continues speaking specifically about Halifax with a population of more than 370,000: “It’s the centre of government here. We have four universities, research centres and major hospitals. The military is based here -- the Navy, Air Force and Army. There are a lot of institutions that provide stability here.”
While Halifax is a service-oriented, government- and military-based economy that keeps the market level, smaller areas throughout the region tend to be one-industry towns, focused on agriculture and fishing; and some are manufacturing hubs, making them more susceptible to macroeconomic swings. Brokers here understand their clients may hold seasonal jobs and require a different type of planning for their mortgage payments than the traditional full-time, steady paycheque work that is seen more in big-city markets.
Lenders don’t get it
One problem brokers in all provinces spoke about was they don’t have access to as many rate and product options from lenders as their counterparts in Toronto, Calgary or Vancouver do. “Clients will see an interest rate on the Internet and I will make a very strong and clear statement to them that I have the best rates but you may find a better rate applicable only for Toronto or Vancouver,” says Keith Stapleton, a mortgage broker based in St. John’s, Nfld., with more than 22 years experience in banking and mortgages with mortgagebrokers.com. “That’s something they need to be mindful of if they’re comparing financial options, opposed to what’s available here.”
Brokers and clients are also hemmed in by lending area restrictions. “Many lenders will not lend in rural P.E.I.,” says Darren Ings, a Charlottetown-based mortgage broker with 10 years of experience. “The property has to be somewhere within so many kilometres of Summerside or Charlottetown, the Island’s only two cities. So even though somebody lives in downtown Charlottetown with a certain credit rating can get a property financed, the same person sitting on a similar type property outside of the lending area can’t get financing.” This is true not just of P.E.I. but in all the other Atlantic provinces as well.
These lending restrictions essentially come down to where the lenders are based, which is mostly Toronto and Vancouver. The common consensus among Atlantic brokers, including the ones who’ve lived and worked in Ontario, Alberta and B.C., is that the lenders simply don’t understand the East Coast provinces.
“They don’t understand the marketplace that’s here,” says MacVicar, who is originally from Nova Scotia but worked for nearly 20 years in Toronto till he decided to return home in 2005 and start Premiere with his brother David MacVicar. “They’re not getting a ton of volume relative to what they get in Toronto and in the markets they understand, so they would just rather wait until the general markets stabilize. As the economy overall improves, they’ll come back again and expand their territories.”
For the lenders, it is all about the money. The average mortgage in Atlantic Canada ranges from $125,000 to $200,000, while Toronto and Calgary easily see mortgages at $300,000 and more, and a normal mortgage in Vancouver likely starts around $500,000. Not much can be done to change the lenders’ perceived risk on the region, and it is just a matter of time for the economy to fully recover and their desire to expand their market areas. But it is not a huge problem for Atlantic brokers. As far as they see it, the lenders who do work with them are supportive and provide the best service they could hope for.
Battling image and banks
No matter where you work in Canada, a common issue amongst brokers is how they are viewed by the consumers. Brokers are constantly fighting a reputation that they are the choice of last resort. The market share for financing homes for brokers in most Canadian provinces is no more than 30 per cent, except for Quebec, where it’s roughly 50-50 between banks and brokers. The Atlantic provinces came even later to brokering, and market share may be only around 10 per cent.
“We are seen as a bunch of crooks,” says John Dearin, mortgage broker for eight years in St. John’s, Nfld., with his own franchise, Dominion Lending Centres
Mortgages and More Mortgages and More Ltd. “You come to us because you have bad credit. You can’t get a loan with the banks so you come to us. That is the perception here.”
MacVicar also finds Atlantic Canadians hold a fierce loyalty with their banks. “In Greater Toronto, people are looking for the best deal,” he says. “Here, there’s a lot of loyalty to their current mortgage provider, current bank. So when you’re competing for a client, if they have an established relationship with their bank, they are not very easy to move. In Atlantic Canada, people need to trust you, they need to look you in the eye and know you well for them to want to do business with you.”
So when it comes to competition in the mortgage industry, brokers find that the banks are still gods, so they are keen on supporting one another to promote the brokers as a first choice. “If we have a client who recently talked to another mortgage broker, we try to encourage them to go back to that broker,” says James Shinners, broker based in Hammonds Plains, N.S., with Mortgage Managers. “I don’t think you necessarily see that in Toronto where it’s a lot more competitive. There’s more co-operation here.”
Regulation, or lack thereof
The other issue that is creating difficulty with the mortgage broker image is there is virtually no legislation in place in any of the Atlantic provinces to standardize the profession. “In Nova Scotia, to obtain a mortgage broker licence, you simply go down to Service Nova Scotia and pay your $250,” says Shinners. “I assume they do a criminal background check, and as long as you haven’t killed anyone recently, your licence shows up in your mail four weeks later.” In P.E.I., there is no licensing required at all. Anyone can print up business cards with the mortgage broker title on them and start working.
Currently, the Canadian Association of Accredited Mortgage Professionals (CAAMP
) is pushing the agenda with the Nova Scotia and New Brunswick governments to enforce legislation that would ensure brokers receive adequate education and training before becoming licensed. The hope is once that comes into place, the Newfoundland and P.E.I. governments will follow. “In the larger provinces, such as B.C. and Ontario, you have the independent associations as well,” says MacVicar. “What we really need here is an Atlantic Canadian association so we can push this agenda to get some better regulation.”
In the meantime, as more seasoned banking and finance professionals begin to see the potential of the mortgage industry and enter into Atlantic Canada, they inevitably bring with them the encouragement of experience, education and mentorship. Mortgage Managers in Nova Scotia has partnered with the Maritimes Business College to offer a week-long mortgage course that covers the basics for those new to the business who are interested in becoming a broker.
Home sweet home
While there are particular challenges to the mortgage market in the East Coast that you don’t see as much through the rest of Canada, all brokers agree the best part about working in the Atlantic provinces is that it is much more laid-back. “The people in Atlantic Canada are the best people in the world,” says MacVicar. “I’ve travelled a lot and Atlantic Canadians are wonderful, salt-of-the-earth people, and family and loyalty means a lot here.”
The majority of Atlantic Canadians, including the brokers, were born and raised in the regions, and while some have travelled and lived elsewhere, it is ultimately home for them.
New Brunswick: A bilingual province
One of the unique challenges New Brunswick faces in the mortgage market is that it is the only bilingual province in the country. “In the southern part, you’ll get your three large centres: Fredericton, Saint John and Moncton. The south is primarily English. In the north, we have French,” says Andrew Libby, president and CEO of The Mortgage Makers based in New Brunswick. “The homes are different, the lifestyle is different, the way of living is different.”
The East Coast, rural French lifestyle is keen on building relationships with the people who help them buy their homes and manage their money. “They want to see you, feel you,” says Libby. “When you sit down with them, they want to know who your parents are, how long have you been in the area. They want to build that relationship before they give you their business.”
When working with lenders, the language difference can be a barrier. Since most national lenders are based in Toronto and Vancouver, the lenders don’t seem to have enough support staff who speaks French. “So collections or delinquency in the French region is actually much higher than anywhere else,” says Libby. “And it’s not because they don’t want to pay. It has nothing to do with seasonal employment. It’s the language barrier and properly asking people to make the right arrangements.”
So with this additional barrier and because the relationship is that much more important in the French region of New Brunswick, brokers need to emphasize from day one that their clients can contact them if there is any trouble with their mortgage after the deal has been made. “If I have a problem with my car insurance, I don’t call the insurance company,” says Libby. “I call my agent to say, ‘I have a problem. I need some help on this.’ The broker needs to be seen the same way.”
Prince Edward Island: mini homes
In P.E.I., a popular housing option is mini homes. Mini homes are pre-fabricated houses that are like a house but not as wide. Unlike mobile homes, mini homes are built on a wooden frame and they can be moved in their entirety to the desired location. They cost around $60,000 and are energy-efficient.
Darren Ings, a Charlottetown mortgage broker for 10 years, says he only knows of one or two lenders who will finance a mini home. “Lenders are very wary of them because there’s not a lot of them in Toronto, and if you’re not very familiar with lending on them, you don’t want to take the risk,” says Ings. “Except it’s not a risk. It’s a different mindset based on geographical issues and economically related issues.”
Mini homes aren’t commonplace throughout P.E.I., but they do make up a small portion of the market, and are popular in other Atlantic provinces as well. The lack of understanding of different housing types, and essentially fearing the unknown on behalf of the lenders, is yet another example of how regional and separated the eastern provinces can be from the rest of Canada.