As the mortgage industry grapples with regulation, to the chagrin of many, not everybody believes the sky is falling. In fact, according to one broker, an opportunity has presented itself.
Frances Hinojosa says that, for too long, brokers have focused on securing their clients the best possible interest rate, but those days are over. Homes are still affordable for homebuyers, but amid the hurdles presented by B-20, educating consumers about how to become more financially literate and maintain positive cash flows has become imperative.
“At Tribe Financial, we coach our agents to do that. The first question we should be asking consumers is ‘What’s your budget?’” said the brokerage’s managing partner. “’What are you comfortable paying every month for your shelter costs?’ What can they afford according to their lifestyle? Are there added expenses they have to save for in accordance with their life stage? Do they have kids in child care? Are they saving for retirement?”
Hinojosa is an unabashed proponent of debt consolidation because it’s the cornerstone of a larger plan she constructs for clients—especially the younger ones.
“Maybe it’s time to consider a high-ratio mortgage and put less money down and pay off some consumer debt if they’re a young professional with outstanding student debt,” she said. “They’re so fixated on putting 20% or more down, but it might make more sense to pay off some of their debt and put less money down. The B-20 rule changes have created a land of opportunity for us to have in-depth conversations with our clients and create plans that are not only short-term but long-term solutions, as opposed to just securing them the best possible interest rate. It should be about securing them the best possible cash flow and budget for their lifestyle.”
Hinojosa attributes consumers’ relentless pursuit of the best interest rate to the proliferation of rate sites, and says that mortgage lending is catchall in nature.
“A decade ago, lending was one size fits all, but as the lending rules changed, and as B-20 morphed since the first rule changes around five years ago, it’s now time, as professionals, that we coach and manage our clients. It’s the hardest conversation to have with clients sometimes,” she said.
“As mortgage brokers, the advantage we have over major banks is we do have multiple solutions for them, like the major banks, monolines, trust companies, and credit unions.”
Dylan Furlong, a partner and director of sales at Champion Mortgage, echoed Hinojosa’s sentiments when he said that brokers have proven themselves resilient in the face of numerous regulatory changes, and that, acting in the interests of their clients, they will find solutions. Equally important, added Furlong, is that consumers understand that.
“There’s a lot of negative press and people get sucked into it,” said Furlong. “I think it’s important for people to understand, especially when using a broker, that they still have options. The sky isn’t falling. People say they’re stuck, but a broker has all kinds of options for these clients. They can still use credit unions, for example. They don’t have to stay with their old lender if they don’t qualify—we can get around it. I think banks and some realtors are saying the new rules just stopped everything, but there are a lot of options out there, and I think it’s important that our Canadians client base knows that.”