31 May

What is a mortgage broker?

General

Posted by: Heather Kreighton

What is a mortgage broker?

You may have noticed that there are many different terms for those of us who work in the mortgage industry besides “broker”.
Mortgage: specialist, expert, advisor, associate, officer, etc. I just want to clear up some potential confusion with all these monikers.
There are 2 main categories that these fall in to. Those that work for a bank to sell mortgage products available from that bank.
The other is for those like myself that work within a mortgage brokerage that has no direct affiliation with any one bank.
Each mortgage brokerage has agreements in place with multiple banks and mortgage lenders to be able to submit mortgage applications for consideration.
There are of course obvious differences between these but some may not be quite so apparent.

Mortgage Brokerage
All those working in the mortgage brokerage industry must be licensed by a provincial government agency, in Saskatchewan it’s called the Financial & Consumer Affairs Authority (FCAA).
While every province has their own set of guidelines, there are 3 different types of licenses offered by FCAA: mortgage associate, mortgage broker & principal broker.
The mortgage associate and broker are very similar as both advertise themselves to obtain clientele, work directly with the clients, mortgage lenders, mortgage insurers, realtors and lawyers in the service of their clients. The key difference is that an associate must work under a supervising mortgage broker to ensure they remain in compliance with FCAA regulations.
Each mortgage brokerage will have a principal broker (aka: broker of record) that oversees the operations of the brokerage as well as all the associates and brokers within the brokerage.
Most all those working in the mortgage broker industry are commission based. Our income is derived from the mortgage lenders that we submit mortgage applications to.

In order to apply for a license as a mortgage associate, applicants must complete an approved mortgage associate education course and provide a current criminal record check along with the required application documents.

Application for a license as a mortgage broker are the same as for an associate with the addition of a previous experience requirement.
The applicant must have been licensed as a mortgage associate for at least 24 of the previous 36 months.

In addition to annual applications for renewal, licensees must also:

  • Purchase and remain in good standing with professional errors and omissions insurance
  • Complete FCAA approved annual continuing education courses
  • Provide FCAA auditors access to mortgage files for review whenever requested
  • Advise FCAA of any changes to brokerage or contact information
  • Immediately advise FCAA of any offences under the criminal code (other that traffic offenses)

Bank Branch Mortgage
Those that work in mortgage lending for a bank are normally paid by the hour or are salaried and may have a performance bonus structure.
Entry level positions do not require any education beyond high school. Training is provided on the job by the employer with supervision by the branch manager and more experienced staff.
There are no licensing requirements by any provincial or federal governing body and errors and omissions insurance is not required.
Many banks have mobile mortgage staff that may or may not conduct business within the branch and are often paid on a commission basis rather than hourly or salary.

If you have any questions, contact your Dominion Lending Centres Mortgage Broker near you.

Kevin Carlson
Dominion Lending Centres – Accredited Mortgage Professional
31 May

Bank of Canada Maintains Overnight Rate at 1-3/4%

General

Posted by: Heather Kreighton

Bank of Canada Maintains Overnight Rate at 1-3/4%

In a terse statement, the Bank of Canada maintained its benchmark overnight rate for the fifth consecutive meeting and stated that economy was performing in line with the projections in the Bank’s April Monetary Policy Report (MPR). Following a slowdown in economic activity late last year and in the first quarter of this year, the Bank’s press release said that evidence was mounting that economic growth was rebounding in Q2. “The oil sector is beginning to recover as production increases, and prices remain above recent lows. Meanwhile, housing market indicators point to a more stable national market, albeit with continued weakness in some regions.” The central bank was referring primarily to the weakness in home sales and prices in the Greater Vancouver Area.

The strength in the jobs market is an indicator that businesses see the deceleration in growth as temporary. Recent data show an uptick in consumer spending and exports in the second quarter, and business investment has improved. However, inventories rose sharply in Q1, which could dampen production growth in the next few months.

The recent escalation of trade conflicts between the US and China is heightening uncertainty and economic prospects. Also, “trade restrictions introduced by China are having direct effects on Canadian exports. In contrast, the removal of steel and aluminum tariffs and increasing prospects for the ratification of the new NAFTA agreement (Canada’s acronym for which is CUSMA–Canada-US-Mexican Agreement) will have positive implications for Canadian exports and investment.”

Inflation has edged up to 2% as expected, boosted by the carbon tax on gasoline.

Bottom Line: Overall, the Governing Council’s optimism that the economy is rebounding has been reinforced, although they acknowledged increasing global risks. The Bank’s future decisions will remain data dependent, and they will be especially attentive to developments in household spending, oil markets and the global trade environment. It is widely expected that the Bank will remain on hold at least until after the October federal election.

The central bank does not share the view of some economists that the economy is headed for recession and rate cuts are necessary. Today’s overnight rate remains below the Bank’s estimate of the neutral rate at about 2.5%, so barring a negative exogenous shock to the Canadian economy, the next rate move could well be to increase overnight rates, but not until after the election.

Dr. Sherry Cooper

Dr. Sherry Cooper

Chief Economist, Dominion Lending Centres

31 May

Debt: To consolidate or not to consolidate? That is the question

General

Posted by: Heather Kreighton

Debt: To consolidate or not to consolidate? That is the question

If you are a Canadian living in debt, you are not alone. According to Statistics Canada, household debt grew faster than income last year, with Canadians owing $1.79 for every dollar of household disposable income to debt(1).

• Canadian households use almost 15% of income for debt re-payment(1).
• 7.3% of this re-payment goes towards interest charges (1)
• Interest charges are at their highest level in 9 years(1).
• The cost of living is projected to increase in 2020 (2)

So how can one ever get out of debt? Debt consolidation.

What is debt consolidation?
Debt consolidation means paying off smaller loans with a larger loan at a lower interest rate. For example, a credit card bill debt with interest of 19.99% can be paid off by a 5-year Reverse Mortgage with an interest rate of 5.74%* from HomeEquity Bank. (*rate as of May 2, 2019. For current rates, please contact your DLC Mortgage Broker).

A lot of confusion surrounds debt consolidation; many of us just don’t know enough about it. Consider the two sides:

The pros
• The lower the interest rate, the sooner you get out of debt. A lower monthly interest allows you to pay more towards your actual loan, getting you debt-free faster.
• You only have to make one monthly debt payment. This is more manageable than keeping track of multiple debt payments with different interest rates.
• Your credit score remains untarnished because your higher interest loans, such as a credit card, are paid off.

The cons
• Consolidating your debt doesn’t give you the green light to continue spending.
Consolidating helps you get out of debt; continuing to spend as you did before puts you even further into debt.
• A larger loan with a financial institution will require prompt payments. If you were struggling to pay your debts before, you may be still be challenged with payments. A CHIP Reverse Mortgage may be a better option; it doesn’t require any payments until you decide to move or sell your home.
• You may require a co-signer who will have to pay the loan, if you’re unable. Note that a Reverse Mortgage does not require a co-signer, as long as you qualify for it and are on the property title.

So how do you know if debt consolidation is the option for you? Start by contacting your mortgage broker and asking if the CHIP Reverse Mortgage could be the right solution for you.

SOURCES:

1 https://www.cbc.ca/news/business/household-debt-income-1.5056159

2 https://www.statista.com/statistics/271247/inflation-rate-in-canada/

https://www.bankofcanada.ca/2019/03/spending-shifts-and-consumer-caution/

https://www.cbc.ca/news/business/consumer-spending-consumption-canada-1.5006343

Andrea Twizell

Andrea Twizell

HomeEquity Bank – National Partnership Director, Mortgage Brokers