This week there are two headlines grabbing the attention of mortgage brokers, bankers and borrowers in Canada. Both have far reaching implications in the mortgage industry and it may not be a fluke that both are making headlines in Canada at the same time. On the one side we have the government of Canada expressing concerns about debt levels and the ease for borrowers to attain credit. The other news maker this week is an announcement by mortgage insurer CMHC, a Canadian crown corporation, that they are reaching their insurance limit of $600 Billion as set by the Canadian government. The resulting effect of this news is that insured mortgages in Canada could be harder to qualify for.

As a consumer it may be very confusing to understand what the concerns and implications are. In this post I’ll address Ottawa’s concern for tightened mortgage rules.

As Canadians we are proud of hockey, our multiculturalism, Celine Dion and our remarkable resilience in the face of global economic decline. Okay, maybe we aren’t so proud of Celine but it’s true, if you have an opportunity to travel abroad and talk business with anyone from outside of Canada there is a tremendous amount of reverence from all corners of the globe for our economic policy and strength. And that is due in large part to our prudent banking system. So if we have such a prudent banking system what is all this fuss about tightened mortgage rules and tightened credit?

Ottawa is becoming more and more uncomfortable with debt levels. Record-low mortgage rates being offered by Canadian banks and the ease with which some institutions are advancing lines of credit seems to be keeping finance minister Jim Flaherty up at night (by the way, the fact the Government is concerned about low rates is a clear indication of where they believe rates are going to be for the short to medium term).

So are Canadians really in that much more debt? The following graph sourced from a presentation by CIBC chief economist, Avery Shenfeld, show some interesting and revealing information about Canadians and their debt. The graph shows that since 2007 borrowers who are considered heavy debtors (see * definition) have piled 101.4% more debt over the last 5 years. Translation: if you owed $10,000 in 2007 you now owe $20,140.  While borrowers who are considered light to medium debtors have actually lowered their dependence on credit. Perhaps the more troubling statistic is that of those people who are heavy debtors 44% are 45+. These are the wrong kind of debtors, if the majority were in their 20s and 30s this wouldn’t be so bad as they are leveraging to start out their lives but its never good to have an aging population in debt.

And yet despite the increased number of Canadians who shouldn’t be in debt, I’m not convinced tightened rules is a good idea. It’s one thing for politicians to sit in Ottawa and make statements about credit but the reality on the street is that it has never been harder to qualify for a mortgage. I’m working with mortgage lenders and insurers every day and I can assure you that nothing and I mean nothing gets by them. The number of mortgages that went into default in Canada last year were only 0.38%.  Borrowers are required to dot every “i” and cross every “t” and credit is not easily given out like these reports would have you believe. In my experience credit needs to be earned these days.

The conspiracy theorist inside of me (or at least the political one) sees this as a political play to justify the tightening of CMHC rules or some other major change in the mortgage industry effecting borrowers and lenders alike. In the face of what might be an already slowing Canadian real estate market I’m worried about what these changes will mean. Stay tuned for my follow up commentary on CMHC reaching its limit and the implications to the mortgage borrower.

Do you have something add? I’d love to hear about your experience qualifying for a mortgage? Do you think it’s as easy as Ottawa would have us believe?

Christopher Molder – Toronto Mortgage Broker. Have a question about your mortgage or want to qualify, call me at 416.461.0204.

I love questions and I answer them all.

Any of Tridac – The Mortgage Centre’s clients know exactly what my connection to piggy banks is. If you’ve done business with us then you no doubt have received one of our cute little piggy banks as a ‘thank you’ gift after closing your mortgage.  The significance of the piggy bank runs deep in our family business as a metaphor for savings and the building of equity in your home. My Dad has been using piggy banks for years and the apple hasn’t fallen far from the tree as evidenced in our most recent company portrait below.

Piggy banks and cute closing gifts aside, the glue that binds together any successful relationship business like our mortgage brokerage, is a solid client relationship management system or CRM in industry terms. I rely on British Colombia based CRM provider GoMax Solutions for the tools and systems that allow me to provide the personalized service that my clients have come to expect and enjoy from me.  Earlier this month GoMax ran a Facebook contest asking mortgage agents and brokers to share their best marketing ideas. I shared our Piggy Bank idea below and won the $100 prize!

Upon successfully closing a mortgage with any of our clients, we send them a very attractive looking piggy bank and message along the lines of “like a constantly dripping faucet will eventually fill any vessel, the accumulation of small amounts of money will amount to significant savings over time.” The piggy bank and savings then become a topic of conversation throughout our various touch points throughout the year. GoMax has made the management of these touch points so easy. On our client’s birthday we send them a card with a brand new shiny loonie. We use the piggy bank as a metaphor for equity in a client’s home and use it to show how small changes to payment habits can result in major savings over the life of the mortgage.

Whether you are a first time home buyer shopping around for a mortgage or you already have a mortgage and are looking to see what else is out there, I invite you to give me a call 416.461.0204 or fill out the contact form below. Not only will you get  personalized attention from experienced brokers (checkout our client testimonials) but you’ll also receive great rates, unbiased advice and your own little piggy bank and all of this for free! Why for free? Because as a mortgage broker I get compensated through the bank by a finder’s fee so our service doesn’t cost you. I look forward to hearing from you.

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I’m happy to announce the Son Of A Broker Facebook Friday the 13th contest! Lets change your luck this coming Friday the 13th and give the traditionally unlucky day a new meaning.  I’m running a contest giving away a $50 gift card to Oliver & Bonacini which can be used at any of their fine establishments across the city.  The contest is so easy to participate in that even my Dad figured out how to join. All you have to do is “like” my facebook page.

Step #1 – Visit Facebook.com/sonofabroker

Step #2 – “LIKE”

Step #3 – Cross your fingers, put on your lucky shoes and don’t wash your lucky shirt for a week.

On Friday, January 13th,  I’ll draw one lucky winner from my “like” list using www.random.org. The lucky winner gets the $50 gift card towards any O&B restaurant including my favourite, Canadiana inspired, Bannock. Good luck.

There’s seldom an occasion during which we can sit back and contemplate time gone by and time to come. Thank goodness we mark each calendar year with a definite beginning and end. This gives us a formal opportunity to reflect, reset and plan ahead.

2011 was another fantastic year at our brokerage Tridac Corporation Ltd – The Mortgage Centre. It was also another year of learning and evolving. After 34 years in business, there’s still so much to work on and improve. When my dad started our brokerage there wasn’t a computer in sight, whiteout was always in stock and the typewriter was a modern piece of equipment. This past year, technology was again at the forefront of our growth as we evolved our brokerage into a fully social business.  With the help of my brother Mark we took another serious look at social media. Actions included revamping our website, again, adding a Son Of A Broker – Facebook page (please become a fan we only have 28 likes – Mark thinks that’s pretty weak), joining the conversation on Twitter, and learned that Linkdin really isn’t that social. I’m not too sure why we are on Google+ but I figure it’s good karma or something like that (I know you’re reading this Google). We have a Google Places page and even have legit reviews about our business! I also redesigned this very blog in mid 2011 as the previous version was so 2010.

Our clients will be happy to know that in late 2011 we integrated new customer relations software which will improve your experience with us. Features include an annual phone call from yours truly and enhanced communication to notify you of any changes that would affect your mortgage.  We’re also in the process of setting up an online debt management system designed as an easy to use budget tracker. This system will not only help you determine where your money is being spent but more importantly assist you to get out of debt and pay down your mortgage as quickly as possible.

To our new and old clients who have made 2011 a great year thank you for your business and support. My dad and I truly appreciate the opportunity to help you with your mortgage financing. At risk of making this sound like a post scribbled in a year book I’d also like to use this opportunity to shout out to a few colleagues, partners, and friends who have made this year fun and taught me a lot: Mark Savel, savelblogs.com; Kerri-Lynn, Brennan & Alyssa  Ratehub.ca; Kevin Tuttle, ChrisClarketeam.com; Joy Paterson, condochicks.com; The Bhandari brothers, talkcondo.com; Matt & Cliff, BuzzBuzzHome.com; Geoff Charkow, MerixFinancial; Tony Olivera, Remax; and Brian Persaud, urbantoronto.com.

Best wishes for continued success in 2012.

Christopher Molder – Son Of A Broker

Several weeks ago I went about buying a new set of downhill skis for the upcoming season. I had no clue what was available on the market and I didn’t have the time to go into a ski shop and chat with the sales rep. Instead, I did my research online. Within an hour I narrowed down a selection of hundreds of skis to just one. I couldn’t believe the quality of information available including interviews with the manufacturers’ sales reps, price quotes and candid video testimonials of skiers who tested the same skis that I bought. The entire process was amazing and the experience gave me the confidence to buy the skis online all without ever consulting an expert.

When it comes to shopping online, I’m not alone. Statistics Canada reports that in 2010, 51% of Canadian internet users ordered goods or services online. Not surprising considering the number of people buying concert tickets, airline tickets, booking hotels, or buying electronics like iphones and cameras. But how good is the internet when it comes to shopping for more personalized and “technical” goods and services like skis or mortgages? Well, shopping for skis online obviously works, so what about shopping online for a mortgage?

The experience of a mortgage borrower shopping online can’t be much different than my experience shopping for skis. Just like skis, mortgages are technical and come in different shapes, sizes and brands each designed for a specific purpose. Narrowing down your search can be a challenge with every broker, bank and specialty website vying to grab your attention. The noise can be overwhelming. So should you feel confident shopping for a mortgage online?

Lets face it, mortgages remain the single largest expense a typical household will incur. I think few people feel confident making a decision based solely on information gathered from a website without consulting a professional. But, with better and better mortgage sites appearing, the ability to shop completely online for a mortgage may one day become a reality. Mortgage websites have evolved into reliable resources helping you, the borrower, find relevant information to help choose the right mortgage.

Take the popular mortgage site ratehub.ca a one of kind website that not only serves as a search engine to find Canada’s best rates but serves as a platform to educate and empower borrowers to make informed mortgage decisions. A great feature of the site is that neither a financial institution nor a mortgage broker runs it so the information and advice are neutral.

If you’re shopping online for a mortgage it’s tough to know what sites are current and offer reliable information. A few things to look out for when browsing a mortgage site include:

1. Sites that engage visitors through social media like Twitter and Facebook. A site that engages their audience is likely to be careful about the quality of content they’re sharing online.
2. If the broker is blogging, check to see how recent their posts are.  It’s a great way of determining whether someone is “home” and actively working the site. It also helps you to determine if the content is relevant and current.
3. Check for testimonials on a brokers website. As brokers we crave affirmation that we’re doing a good job and we love to share our success with the world. It’s also surprisingly obvious when someone is faking testimonials on their own site.

I’ve written enough mortgages in my career to know that there isn’t a one size fits all mortgage solution. We live in a dynamic and ever changing world and the needs of each borrower are unique. Having said that you shouldn’t shy away from educating yourself online and engaging mortgage websites. They provide a wealth of relevant information that can help you level the playing field so that when you do engage a mortgage professional you are doing so well informed.

Now, if only it would snow I could use those skis that I bought online!

Earlier this fall I partnered up with a great website called Ratehub.ca. The site is unlike anything else you’ll find online. For starters, it’s not run by a financial institution or mortgage broker so the information and rates you find there are all 3rd party provided and as unbiased as possible. Not only is the team that runs the site highly specialized and cutting edge they also have a great sense of you humor and know how to have fun.

About a month ago they uploaded a post on their blog entitled Christopher Molder: Meet the Man Behind the Mortgage Rate where they quized me on all aspects of my life including hobbies and future ambitions. They even managed to dig up some old pictures of me in another life as a musician! Did you know that I used to play the accordion in a Toronto based Latin Band? Here is an excerpt:

What did you do before you were in the mortgage business? Any odd jobs?

 As a second generation mortgage broker it feels like I’ve been in the mortgage business forever. During university I held summer jobs with various mortgage lenders. I also worked for a promotional staffing company which gave me awesome experience engaging consumers in unique settings for various clients. Read more.

For more than 20 years our office has been located on the Danforth, an area of the city best known for it’s Greek cuisine and culture.  Although the Greek influence in the neighbourhood has started to fade in recent years, some old Greek families and businesses hold on to the traditions of a homeland that is now the epicenter of a global economic earthquake whose tremors are being felt the world around.

Events in Europe are unfolding like any great drama with twists and turns in the plot. The story began in Greece and the first twist came when  Greek prime minister Papandreou put forward a referendum on proposed austerity measures. Without skipping a beat the plot thickened in Italy with the resignation of Mr. Bunga Bunga himself Berlusconi. Just this morning I heard of Portugal’s largest union going on strike over austerity measures in that country.

As a mortgage broker I often see things as a question of borrowers and lenders. Countries much like individuals can borrow money and incur debt. Typically we express the total debt of a country as a percentage of national GDP as one way of looking at borrowing levels within the context of a country’s ability to repay their debt. Canada’s Debt to GDP ratio is currently 83%. The United States of America’s ratio is 98% and according the ECB Greece’s debt represents  156% of their GDP. (Wikipedia) To put this into context when applying for a mortgage a bank will approve a maximum loan amount using 44% of a borrower’s gross annual income to cover payments associated with housing(taxes, mortgage, condo fees etc) and all other debts and obligations, such as car loans and credit cards.

Obviously it is ridiculous to compare a country’s sovereign debt with personal debt but it’s interesting to observe that the fall out of spending more than one earns whether its on a national or personal level leads to a crash.  On a personal level living beyond your means for an extended period of time will eventually lead to some form of crisis whether it’s bankruptcy, marital breakup or any other forms of self destruction. In the case of national debt we observe massive demonstrations, riots, strikes and political fallouts which are unproductive and can cause long periods of recession.

So if Greece walked in to my office located on the Danforth (seems like the most logical place for Greece to go shopping for a mortgage) what would I tell her? Obviously she wouldn’t get far with a mortgage application but what advice could be given? In our consumption driven society where credit is so readily available how does one avoid living beyond their means? Perhaps the best remedy is to learn to live in a place of sufficiency. We are so often driven by the need to fill the void of something that is lacking in our lives, more money,  more cars, more clothes, more electronics, more toys, more vacations, more stuff we don’t really need. But if we were to stop to appreciate what we already have, we may discover life provides us with an abundance of what we really need to live within our means.

Here is a little video that I find hilarious regarding the Greek bailout. Enjoy!

Click here to view the embedded video.

I like to share with my readers the small successes of my online exploits. Last week I was quoted in two separate Financial Post articles about mortgage interest rates. The recognition, as insignificant as it may be, is very satisfying and reassures me that my blogging is achieving its goal. The purpose of this blog is to share the knowledge and experience of over 30 years in the mortgage business with you.  Getting media attention means that I am exceeding the scope of my blog!

The first article is regarding a large drop in bond yields last week which have an effect on fixed rate mortgage rates. Bonds down, but banks slow to cut rates

The second article is about sudden changes to variable rate mortgages late last week. RBC blinks, boosts variable mortgages

Enjoy!

Christopher Molder – Son Of A Broker

A few weeks ago I was contacted by mortgagebrokernews.ca , Canada’s leading mortgage industry news site, to come in and do a video interview about the challenges and benefits of blogging for mortgage brokers. While I still consider myself a novice in the field, I was happy to share some insights with my colleagues that learned I through blogging on sonofabroker.com.

Although the video is directed towards the mortgage broker community, I wanted to share the video with as I am proud and grateful for the recognition.

Thank you!

As seen on mortgagebrokernews.ca

After racing 51 hours we were greeted with the best tasting beer ever!

If you’ve followed my blog or know me personally then it is no secret that I love two things: sailing and adventure. This past weekend I participated in one of the most challenging experiences of my life, the Lake Ontario 300 race. The race was started about 20 years ago and is a 300 nautical mile (335 land mile) race right around lake Ontario. I participated on a friend’s Farr 30 which is a 30 foot keel boat designed for one thing and one thing only racing. That means there were no comforts on board… not even a private head (nautical term for toilet). For 51 hours straight, me and 5 others sailed in some consistent and often challenging conditions where lack of sleep, proper food and exposure to the elements make it no pleasure cruise. In the end we were the second boat to cross the finish line in Port Credit out of 144 participants! Only a few minutes away from the leader. Despite all of the discomforts the experience was ultimately rewarding and one that I will not soon forget!

If you are interested you can track the entire race on the Lake Ontario 300 website. I was on “Kaizen” USA 27.