Mortgage Broker – “The government has done plenty to put the brakes on the Vancouver market. It is quite difficult to qualify people for mortgages even for the amount of house they need.”

“The article makes reference to our situation paralleling the US situation, and that is also utter nonsense in so many ways that I wouldn’t even start to get into them all. We do not offer loans at 100%+ LTV, we do not offer teaser loans to subprime clients and qualify them on the teaser rates, and we do not offer NINJNA (no income, no job, no assets) mortgages. As it is, in the Vancouver market, it is quite difficult to qualify people for mortgages even for the amount of house they need. The government has done plenty to put the brakes on the Vancouver market as it is. The harder the government makes it to lend money, the more that the market tilts in favor of the wealthy and the more difficult it will be for average and lower income earners to get ahead. That is a much greater thing to fear for the future.
I have said this many times, but the lending that really needs more regulation is the credit card and unsecured lending industries. What regulation have they been scrutinized under other than a regulation that requires them to disclose how long it takes to pay off a credit card bill with minimum payments? It is that ability to spend money so easily at such high interest rates that is really hurting people. However, the housing market is the one that gets constantly attacked. “Pay no attention to that man behind the curtain.”
I live and work in the highest priced market in Canada, and this is where it is hardest for people to buy. In most of Canada, housing is SO much more affordable than here. Most of the country has nothing at all to worry about.”

– Jeff Evans, Richmond mortgage broker, posting as ‘Jeff’ at greaterfool.ca 28 Mar 2012 9:01pm

“I have been enjoying all the radio, TV and print ads from the major banks telling everyone about 2.99% for 4 years as if they are offering you something special. I do have that available with other lenders as well, but I have something even better… 2.89% for 4 years! That is better than the banks are offering!
Contact me today and we can get you locked in for this special offer.”

– Jeff Evans at his site bc-mortgage-brokers.ca, 20 Mar 2012

What do you call a mortgage that starts at a 2.89% rate and then, after 4 short years, resets to a rate that is perhaps substantially more than that?
“Teaser”, perhaps?
– vreaa

33 responses to “Mortgage Broker – “The government has done plenty to put the brakes on the Vancouver market. It is quite difficult to qualify people for mortgages even for the amount of house they need.”

  1. Basement Suite

    “The harder the government makes it to lend money, the more that the market tilts in favor of the wealthy and the more difficult it will be for average and lower income earners to get ahead.”

    Right, so keep mortgage rates well under 3%, because that and the hyper inflated housing bubble it caused and is supporting is so great for the working class. Keep money as free as possible, forever, why not lets get rates under 2%. In fact if we can get mortgage rates under 1% we might see another huge leg up in housing, this will be good for all of us. Easy money is the answer. So says the mortgage broker.

    • That line jumped out at me as well. The wealthy are a small part of the market by definition.

      If you make it hard for vast bulk of the middle income market to borrow, the result is not that prices stay where they are, and the middle market is out of luck. The result is that prices fall to where transactions start to happen again. It’s called price discovery.

  2. The subtext is that debt is required for the middle class to compete with the well off. I guess Upton Sinclair was right after all.

    • more things change, the more they stay the same
      http://tinyurl.com/6mxv3cx
      whose side are they on again?

    • “The harder the government makes it to lend money, the more that the market tilts in favor of the wealthy and the more difficult it will be for average and lower income earners to get ahead. That is a much greater thing to fear for the future”. ~~ Jeff Evans
      ———————————————
      This must be one of the most manipulative pieces of writing from a Realtor I have seen in a long while. I hardly know where to begin in my criticism. The short version offered here is my initial gut reaction. Total disgust. The man is a harlot.

      • The guy probably believes his own drivel. His government does not.

        What say you: closer or poser?

      • I just about puked in my mouth when I read that. Goosing the real estate market with low interest rates and loose lending standards is turning two generations of low and middle income Canadians into debt slaves. And this is a positive thing? I once read somewhere, “It is impossible to convince one to abandon erroneous beliefs when one’s livelihood depends on those beliefs.

        Certainly Mr. Evans falls into that category. His career success depends on his own continued belief in the myths he is peddling. He could not hold his head up or look himself in the mirror otherwise. He therefore believes those myths fervently, and peddles them like his life depends on it. In a way, it does.

      • Howdy There

        Farmer, Jeff understands the truth. Housing always goes up, or at least never goes down. So more debt is a necessity to compete for houses.

        It’s not as if house prices might actually fall if debt wasn’t available. Nope.

    • what middle class?

  3. Sure we don’t offer loans at 100% LVT. We offer them at 102% LTV with 5% down and 7% cash back. With a 2.99% interest rate, which is virtually guaranteed to be higher at renewal time four years hence. A teaser isn’t really a teaser if it lasts four years. 🙂

    • In fairness, I’m not sure that the people getting cash-back mortgages generally get these low rates. But the principle of it all still stands.

    • Basement Suite

      “With a 2.99% interest rate, which is virtually guaranteed to be higher at renewal time four years hence.”

      I would hope so, but rather doubt it. I guess we’ll see.

  4. I have said this many times, but the lending that really needs more regulation is the credit card and unsecured lending industries. … However, the housing market is the one that gets constantly attacked.

    You tend to hear this argument a lot, especially from mortgage brokers and RE people. It is true that CC debt is dangerous, but the comparison to mortgage debt doesn’t hold water, simply because mortgage lending (interest rates, amortization, etc.) drive the market price of the underlying asset and thus affect everyone interested in buying. (Pretty much everyone has to borrow, and supply is limited.)

    Not so for CC debt: the price of a big-screen TV or a Caribbean vacation is not determined by CC lending policies or interest rates. People who save prudently for these types of purchases are not “priced out of the market” by reckless borrowers.

    • Apparently a big difference between unsecured debt and secured debt is that one is secured and the other is not, tending to contribute to higher spreads on the unsecured stuff, and rather unfortunate humming and hawing when the secured stuff turns out to be less secured than was booked. But that can’t happen here because of (hums and haws).

    • Ralph Cramdown

      Or, to paraphrase, “Folks, I’ve got responsible, well qualified borrowers lined up out the door to get mortgages, and if the banks hadn’t beaten me to it by lending them $30k each at 19.9%, I’d be able to secure them $400k each at 3.5%!”

    • jq. the cc credit inflates prices too. main diff, and change vis-a-vis past practice, with the mortgages is the extent of explicit govt backing leading much higher leverage. the link between creditor and reckless debtor is much tighter for cc.

      • I agree with you about the link, chubster, but ultimately it’s hard to see how the pricing of things that are in effectively “unlimited supply” like electronics, consumer goods, etc. is affected by CC credit. Is there a link between CC interest rates and the price of these items?

      • jq. my explanation is sloppy. the link between creditor and debtor is key, the creditor suffering the direct consequences of debtor recklessness is what keeps the amount of credit in check – ergo interest rates, availability, terms, etc. this is the best and only regulation needed. eg. it is why the cc companies are so vigilant on fraud – they’re on the hook directly. this and default rates are factors in the interest rates they set. imagine instead if the govt backed them explicitly as it does for banks issuing mortgage credit. standards on cc credit issuance would go out the window, they could drop rates and maintain profit margins, more credit issued -> higher prices at the check out.

  5. “The harder the government makes it to lend money, the more that the market tilts in favor of the wealthy and the more difficult it will be for average and lower income earners to get ahead”

    this is very true.

    • So you believe that the path to riches is paved with back-breaking amounts of debt?

    • I agree F1, there is a grave imbalance. CMHC lending should be restricted to those of lower means. Perhaps a family income cap of $40K?

    • f1. the exact opposite. the cronies are getting obscenely rich by having the govt make lending easier.
      howdy. if you’re going to do that. forget the lenders, just give them the money.

    • Generally I’m a ‘get rid of the CMHC’ kind of guy, but I do wonder if there is some room for levelling the playing field with a limited CMHC. Having the CMHC available to back just about everything doesn’t level anything. Direct lending? Might be worth a look.

      Any believer in the quote above cannot support the CMHC in its current mandate.

    • The harder it is to lend money, the lower prices go – not higher.

      • Basement Suite

        Correct. Easy loans with sub 3% mortgages are the air that keeps this thing inflated. Take out the air and the bubble collapses. Prices return to normal (price discovery you called it above), and regular folks will be able to buy RE again at sane prices. When will we see mortgage rates back at 6% for example? Maybe a couple decades is my guess.

      • Basement Suite

        P.s. Even 6% is historically very low, funny how that seems so absurdly high to borrowers today.

      • Agreed. I’m guessing that 98% of homeowners down here in the states are unaware of how rising interest rates are going to drop their home value even further.

        We’re still near historic low interest down here too, and there is only one way for rates to head eventually.

  6. Since this post mentioned CC, I have a question which I couldn’t find an answer to. I recently received notice from PC Mastercard stating that for transactions posted after Jun 1, 2012, they will apply payments to items with the lowest interest rate first, rather than the highest interest rate. I thought this was illegal after they passed that CC consumer rights/protection act 2 years back??

    • When you make a payment they don’t apply it to the lowest rate first. They look at each interest rate bucket balance relative to your overall balance. If the lower interest rate bucket has a balance that is 60% of your overall balance then 60% of your payment is attributed to that bucket until it gets to zero. So no, you aren’t stuck forever with the high interest rate bucket never depleting, your payment is apportioned proportionally. Still, the regulator should force the CC companies to apply all payment to the HIGHEST interest rate bucket first — credit card companies be damned.

  7. “A great deal of intelligence can be invested in ignorance when the need for illusion is deep.”
    Saul Bellow

    This quote was posted before. Realtor, speculators and newspapers etc depend on the housing market for their lively hood. Only thing that will change their tune is a housing crash.

  8. Mortgages are insured / backed by the federal govt and the taxpayer. Credit card debt is not. I actually agree with the mortgage broker here in a twisted sense, however. They should be treated the same. Kill the CMHC and let’s see the market value of mortgage rates and mortgage insurance.

    Oh, and it’s been ages since I’ve heard even heard anecdotal stories of people buying speculative assets with their credit card. I think the last one was Tickle Me Elmo or Beanie Babies, back in early 2000.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s