Brokers report different struggles

Brokers report different struggles

Brokers report different struggles Brokers are still struggling with self-employed clients for a number of different reasons.

"The thing I face most is 'reasonability of income' test," Jake abramowicz of Mortgage Edge wrote on "It is very irregular and one application may pass, while other one may fail. I find that to be the biggest drawback."

Despite record-low rates, brokers are still reporting difficulties trying to secure financing for one unique type of client.

“Rates are great but the problem is if you’re self-employed they’re not for you. Why is it in today’s marketplace where seven years later after the (American) subprime crisis, the U.S. economy is doing better than ours, their real estate markets are doing well?” John Panagakos of Dominion Lending Centres Home Financial told “They’ve forgotten the subprime crisis and we as Canadians still worry about it when it was a U.S. problem to start with.”

Rates across the industry have been low since the Bank of Canada axed its overnight rate to ¾ per cent, with many lenders offering special promotions on various fixed and variable rate products.

According to Panagakos, Canadians are being drawn to the market because of the record low rates but self-employed individuals are encountering the same problems they have all along – lenders are less likely to finance mortgages and higher rates apply when they do.

“We know Canadians have debt but they’re also building wealth at the same time and it frustrates me. Saying you’re self-employed now in Canada is like a dirty word,” Panagakos said. “It’s a shame. I try to deal with a monoline lenders; I’m an advocate for consumers and try to get them the best rate but it’s straight to (the alternative lenders) or MIC lenders.”

Still, not all brokers are reporting an influx of mortgage applications, despite the enticing rate environment.

“No matter what the market is there is going to be a demand from clients who need alternative lending because they either can’t qualify or they choose not to qualify with a mainstream lender,” Jason Scott of TMG The Mortgage Group. “I don’t think people do things necessarily because of rate; let’s put it this way, if you’re buying a house based on interest rate you’re buying a house for the wrong reasons.”
  • Jake Abramowicz 2015-02-25 12:09:34 PM
    The thing I face most is "reasonability of income" test. It is very irregular and one application may pass, while other one may fail. I find that to be the biggest drawback. That being said, why not go to the credit unions? They allow for us to qualify based on GROSS not NET incomes, and give pretty damn good rates and terms.

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  • Rick 2015-02-25 1:57:47 PM
    The Subprime crisis was a symptom and result of a housing bubble. Every global analyst now knows this 8 years later in hind sight. Canadians are worried about a national debt crisis that now dwarfs the US on a household level, NOT a Subprime crisis. The US is doing better because unlike Canada they have a diversified economy and are still for now the world reserve currency. NOT because they offer easier credit to BFS clients. The fact that rates are being reduced only shows the pure desperation of the central bank. As a Canadian its concerning. Prudent investors are rolling up their sleeves at the prospect of deflation and distressed assets.

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  • John S. 2015-02-25 6:56:11 PM
    I agree with Rick. Mr. Pangakos needs to look under the shiny surface of "Canadian wealth". Bidding wars, bleached MLS records, institutional policies and various deceptive techniques in conjunction with cheap credit availability created false real estate values in most of our cities and resulted in unfair competition practice. With deflation only the “wealth” will fade away and the debt is more than guaranteed no matter how many more zeroes one will add to the bottom line today.
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