Since we aren’t selling limited offerings from one institution, we can offer unbiased, expert advice to our clients.
Lethbridge, Alberta Canada (PRWEB) June 14, 2013
Canadian home sales have done well since the recession, but there are signs of slowing. The National Bank Composite House Price Index was up just 2% year on year in April 2013. This is the smallest increase in its 15 year history (outside of the 2008/2009 global recession). *
However, index results varied widely in cities across the country. Calgary (5.5%), Edmonton (3.6%), Winnipeg (4.4%), Quebec City (6.6%) and Toronto (4.3%) all showed gains above the national average. Victoria (-3.3%) and Vancouver (-1.5%) showed home price deflation. With record low interest rates, tighter federal mortgage requirements and slower growth, the Canadian mortgage market has become increasingly competitive.
Consumers are shopping around for the best deals and recent statistics show that more people are turning to mortgage brokers for home financing. Mortgage brokers are independent, licensed mortgage specialists who are not tied to one bank. They have access to multiple lenders and are able to place AAA clients with Chartered Banks, Credit Unions and other top ranked Mortgage Lenders. They are also generally able to find home loans with more flexible requirements for those with bad credit, self employed or new to Canada.
According to the May 2013 Canadian Mortgage Market Report** prepared for the Canadian Association of Accredited Mortgage Professionals, most people are opting for fixed rate mortgages (69%). While 25% of all existing mortgages were through a mortgage broker and 57% through banks (regardless of when they were obtained) the trend to use mortgage brokers is increasing. Since 2012, 31% of consumers obtained their mortgage or mortgage renewal from a mortgage broker, while 51% obtained their mortgage from a bank.
Why the trend towards mortgage brokers? Award nominated Alberta mortgage broker Jim Black explains: “Mortgage brokers work for the clients. We analyze their financial position, risk tolerance and future goals to help them determine how much debt they are comfortable financing with a mortgage, taking into account all the closing and carrying costs. We then shop their loan across all lenders for the best product, term, rate and overall package for their needs. Generally we can negotiate better rates than consumers could get on their own.”
While home buyers may only be looking at interest rates, there are other factors they need to consider before tying themselves into a longer term home loan. “The lowest rates may have more restrictions” says Jim. “If you want more flexibility, like 20% prepayment of the principal per year, skipping or doubling payments, then the mortgage interest rate may be higher for that mortgage product. It is important that consumers understand the terms and conditions so their mortgage doesn’t end up costing more in the long run.” It is also important that they understand all their options. “Most consumers just understand rate. They don’t understand Home Equity Lines of Credits, Combination Mortgages or the All in One product. They also are not aware of how a consolidation refinance can literally save them hundreds, and sometimes thousands, per month.”
The growing trend towards mortgage brokers is not the same across all borrowers. Fewer new home buyers use brokers as many aren’t aware of alternative borrowing options. The same holds true for homeowners that have mortgages coming up for renewal. Statistics show that 66% of homeowners renew their mortgages through their banks. Jim Black explains, “Many homeowners don’t realize they can renew their mortgage with a different lender. Banks rarely go out of their way to give you the best deal on the automatic renewal card. You can save a lot of money on interest by shopping around for your mortgage renewal – just like you shopped around when you first got the mortgage. Mortgage brokers can look at the mortgage renewal your bank has offered and compare it with other lenders. You have nothing to lose by knowing all your options.” Mortgage brokers offer a free service for borrowers, so many home buyers are now seeing the benefits of filling out one application and letting lenders compete for their business.
Jim Black believes the trend towards accredited mortgage professionals will continue to grow. “Since we aren’t selling limited offerings from one institution, we can offer unbiased, expert advice to our clients. We understand that financing a home is a big decision. More than that, we understand that this is more than an investment: It is where you and your family will build memories. We just made a new video showing those sentiments which our parent company, Dominion Lending Centres, is going to be airing as a commercial on National Television beginning this fall. We are on the client’s side and my goal is to be their mortgage broker for life.”
More information on mortgages and the new video can be found at: http://www.mortgageloansalberta.ca.
- Source: House Price Index developed by Teranet and National Bank of Canada, May 2013
**Source: CAAMP’s Spring Mortgage Report May 2013
Media Contact: Jim Black
Phone Number: (403) 331-1327, (877) 394-9422