A record year for Mortgage360

Economic uncertainty not translating to fewer mortgages

You would think that given the economic climate, the amount of mortgages a brokerage is funding would be down. Yet that isn’t the case.

While the number of real estate transactions may be down, the number of mortgages being completed by Mortgage360 is up.

This year has been a record one for Mortgage360, with it funding more mortgages in the first six months than any other previous year – even with the economic uncertainty that has plagued Calgary’s oil industry.

Mortgage360’s ability to outperform the industry has to do with several factors.

First, it aligned with a great charity called Mealshare earlier this year. Every mortgage Mortgage360 now does provides 100 meals to people in need. We think that’s pretty cool. Apparently, so do our clients.

Working with an awesome charity isn’t the only reason it has been a good year. Mortgage360 has found many energy sector workers who applied for mortgages in late 2014 or early 2015 and decided to wait to purchase, either hoping that home prices would fall or uncertain of their employment situation going into 2015, have realized the sky isn’t falling. Now, they are following through with their home purchases.

What is interesting about our numbers, however, is the percentage of people borrowing under $500,000 has increased, while the percentage borrowing over $500,000 has decreased.

This is likely due to the low supply of moderately priced housing, combined with positive net migration. In other words, moderately priced houses are still selling.

Having the Bank of Canada cut interest rates twice since January also helps, sending a clear signal to buyers that a favourable lending environment is here to stay for a long period of time. My guess is if you have a variable-rate mortgage it is likely it will stay below the current five-year fixed rate for the entirety of the term.

The reality is five-year fixed mortgages in Canada are really just five-year adjustable rate mortgages that mascaraed as a safer alternative to a variable. At the end of five years, the rate adjusts anyways. That’s why Mortgage360 is placing its bets on variable-rate mortgages where the client will qualify for them.

For those who aren’t sure about variable rates, Mortgage360 has also introduced the made-to-measure mortgage into its repertoire. The made-to-measure can be any combination of fixed and variable-rate mortgages.

Say, for example, you are not entirely comfortable with variable rates. You could have 70 per cent
of your mortgage in a fixed rate and 30 per cent variable. This combination would allow you to reap the benefits of a variable for a portion, but still have the perceived safety of the fixed.

The great things about the made-to-measure mortgage is you can choose any split between variable and fixed, and the product is available to everyone, including first-time homebuyers who only have a down payment of five per cent.

Speaking of first-time homebuyers, 61 per cent are now consulting a mortgage broker according to the Canadian Association of Accredited Mortgage Professionals’ Profile of Home Buying in Canada. Young consumers are quickly realizing that if Uber can get you there faster and cheaper than a taxi, a mortgage broker can get you a mortgage faster and cheaper than a bank.

Nolan Matthias holds a Bachelor of Arts Degree in Economics, is the co-founder of Mortgage360, and the author of The Mortgaged Millionaire.

* This content was produced by CREB®Now’s advertising department, in consultation with Mortgage360. CREB®Now’s editorial department was not involved in its creation.

Read More

The real cost of your mortgage

Determining it may not be as simple as you think

nolanSome would think a rate sheet would make mortgage-shopping process  easy. All you have to do is scroll through the list and find the company  with the lowest rate, right? After all, pretty much every mortgage is the same? All you need to do is find the best rate?

It’s not quite that easy. Not all mortgages are created equal. Behind each of those rates is a set of terms and conditions that affect the price of the mortgage, quite often more than the interest rate itself. (more…)

Read More

Snowballing debt

Tips on how to get back in the black

nolanAccording to Statistics Canada, household debt levels in the country have  risen to a record high of 163 per cent of Canadians’ disposable income.

Yet that doesn’t mean debt has to be a burden. In fact, it is far easier to get out of debt than most people think. You just need the right strategy.

While there are many ways to get out of debt, there is one that seems to work more
effectively than the rest: the modified snowball technique. (more…)

Read More

Upside of refinance and renovations

The exception to the maximum refinance rule

nolan On July 9, 2012, then Finance minister Jim Flaherty introduced a rule preventing  homeowners from borrowing more than 80 per cent of their property value.

The logic behind this decision was clear – to prevent Canadians from using their home equity as a bank account like many Americans did leading up to the credit crisis in 2008.

The implications were immediate. Canadians could no longer refinance higher interest debts into low-interest rate mortgages. Not-so coincidently, consumer debt levels correspondingly jumped. (more…)

Read More