MARKET MATTERS / READING BETWEEN THE LINES
READING BETWEEN
THE LINES According to CMHC’s latest quarterly report, refinances are down 81 per cent, a drop with profound impact on a broker’s bottom line. Jeff Mayer of Dominion Lending Centres The Mayer Group reads between the lines to explain the drastic drop and address similar changes brokers are grappling with.
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1. With the changes that have occurred
and those that came at the end of 2013, mortgage brokers and lenders will be forced to adapt or die! 2
2. The harsh reality is these changes are a good thing for the Canadian economy. In the end, brokers and lenders will have to work closer together to keep this industry moving forward.
Jeff Mayer, Mortgage Agent, The Mayer Group
3. Mortgages over $1 million are becoming a thing of the past, too. Unless the client is carrying large investments with the institution, a lender, will not entertain the deal.
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4. Self-employed clients are also feeling the pain when it comes time to
refinance or purchase a home. They generally write off a large portion of their income for tax purposes and this does not help the client when applying for a mortgage. If they have to state an increase in their income over and above $65,000, the lender/insurer will ask for a number of documents to justify this (financials, T1 generals, company profile, etc.). As a result of these changes, many “business-for-self” clients are being limited to a trust company, credit union or even a private lender.
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5. “Equity take-outs” are also a thing of the past. Clients looking to extract more than $200,000 from the equity in their homes are facing an uphill battle. Lending institutions will require a major reason and proof for such a large amount of money. This includes trust companies and credit unions. 4
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28/01/2014 3:17:05 PM