The proposed legislation represents a new taxation that will significant impede the financial and shareholder structures of a large number of MICs. Our associations have assembled the support of over 70 companies across the country in an effort to communicate to the Minister of Finance the impact new legislation will have on the mortgage industry.

We are appealing to Minister Flaherty to amend the proposed legislation before it becomes law.

“In short, we are at a loss to understand why the Department of Finance has lumped in MICs with engineered tax avoidance schemes……..The current legislated framework as it applies to MICs ensures that legitimate businesses operate under strict rules. The proposed legislation, however, reclassifies MICs as prohibited investments in the hands of many shareholders, and applies retroactive and punitive taxes.”

These changes will have a profoundly negative impact on MICs, their shareholders, stakeholders and clients. It will also affect the options that we as Mortgage Brokers will have across the country to facilitate real estate transactions for our clients through private funds. It is essential that our industry support this initiative and ensure the government is aware of how this will impact our business.

If you work with MICs, we would encourage you to let your MPs know that it is important to your business that they support this initiative.

Why could I get Prime minus .90 last week and today it is Prime minus .25?

 September 22, 2011 (Vancouver) – A great question, says the Mortgage Brokers Association of BC (MBABC), especially when fixed interest mortgage rates are remaining the same.  The quick answer?  As with many things, it all boils down to money.

Over the last couple of months, banks and other lenders have been offering historically low variable interest rates to qualified homebuyers in an effort to attract new clients and mortgage business.  In the short term, lenders have been prepared to accept these low profit margins with the knowledge that, as the prime rate inevitably rises, so too will their profit on variable mortgages – a similar ‘loss leader’ tactic used by retailers to get consumers into their door.

“However”, says Geoff Parkin, MBABC’s president, “the recent announcement by Bank of Canada governor, Mark Carney has changed the mortgage lending landscape.”   Carney stated that, because of poor performing global markets and continuing economic uncertainty, the benchmark interest rate would remain unchanged.  The long-term outlook indicates continuing low fixed interest rates with no significant increases to the Prime rate.  “In a nutshell”, says Parkin, “the bank’s theory of anticipating rising profits on variable rates was proven wrong.  They’ve had to quickly respond to this situation by reducing the variable rate discount in order to gain back profit.”

What does this mean for consumers who have variable rate mortgages?  Much of the same, says Parkin.  “We continue to see low fixed rates and the variable rate is under 3.0%.  There may still be value in going variable over fixed, but because consumers all have different financial situations and mortgage needs, we recommend they obtain expert financial advice from their MBABC mortgage broker.”

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Contact Geoff Parkin for further comments through:

Media contact:

Madelaine Hatch
Granville Communications
604 720-5185
mhatch@granvillecommunications.com

About MBABC

MBABC represents member brokers in BC and serves as the province’s industry voice with government, regulators and media.  The Association strongly supports and facilitates the highest levels of ethical and professional standards and co-operation in the mortgage industry.  Each member must abide by the Association’s strict Code of Ethics.   MBABC actively supports its members through professional development and networking opportunities.  It supports government policy that encourages small business and home ownership, and is committed to raising consumer awareness about the mortgage broker industry.  MBABC is governed by an elected Board of Directors and an Executive Director.

Mortgage Brokers Association of BC accepts RBC apology but stresses need for professionalism

April 21, 2011 (Vancouver) – The Mortgage Brokers Association of BC (MBABC) has accepted an official apology from RBC following the circulation of a flyer by an RBC mortgage specialist containing a number of mistruths about the way mortgage brokers conduct their business.

MBABC President, Geoff Parkin, approached RBC immediately upon disclosure of this document and worked closely with fellow mortgage industry and association leaders as well as RBC in ensuring resolution of this contentious issue. “We’ve accepted the RBC apology at face value and recognize that they understand the information in the document was inaccurate. We’re more than happy to see competition in the market and in fact, brokers are key to creating that competition, however, we expect that the competition be fair and professional.”

“MBABC mortgage brokers are held to the highest professional standards in the industry”, says Parkin. “We are proud of our long-standing relationships with the banks and other lenders that we work with. We work hand in hand with them on behalf of our clients to ensure our clients receive the best possible financing that’s right for them and this goes far and beyond simply finding the best rates and terms.”

Parkin goes on to say that, mortgage brokers are independent financial specialists that are not tied to any one specific lender. This means they can shop for the best financing options from many lenders, including those not directly available to consumers, to suit a client’s needs. In the vast majority of cases, there is no fee paid by a client to a broker. Brokers are paid by the lender. “However”, he says, “mortgage brokers don’t just ‘do’ mortgages. Brokers are well-educated financial specialists. Our clients appreciate the long term relationships we have with them and trust us to look after their lifetime of financing needs.”

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Contact Geoff Parkin for further comments through:

Media contact:

Madelaine Hatch

Granville Communications

604 720-5185

mhatch@granvillecommunications.com

About MBABC

MBABC represents member brokers in BC and serves as the province’s industry voice with government, regulators and media. The Association strongly supports and facilitates the highest levels of ethical and professional standards and co-operation in the mortgage industry. Each member must abide by the Association’s strict Code of Ethics. MBABC actively supports its members through professional development and networking opportunities. It supports government policy that encourages small business and home ownership, and is committed to raising consumer awareness about the mortgage broker industry. MBABC is governed by an elected Board of Directors and an Executive Director.

“Our opinion is that the government is actually targeting mortgages specifically as the cause of the debt load, where other consumer debt is really the cause,” said MBABC president Joanne Vickery.

Yesterday, federal finance minister Jim Flaherty announced regulatory changes to government-backed insured mortgages, including reducing the maximum amortization period to 30 years from 35 years. (See “Ottawa tightens mortgage rules to curb household debt ”¬ – BIV Business Today, January16.)

Vickery said the regulatory changes will target first-time home buyers who need high-ratio financing.

“All of a sudden, your first-time homebuyers again are being targeted,” she said. “And they’re not the problem with consumer debt.”

In the Vancouver area, she said, first-time buyers are likely to be buying in the suburbs, where she said a person who previously qualified for a $400,000 mortgage over 35 years – assuming a 5% down payment – will now only qualify for $375,000.

Not only will the new rules curtail the kinds of homes first-time buyers can purchase, she said, but they’ll also curtain Canadians’ ability to reduce their interest rates by consolidating household debt into a mortgage.

“The refinancing of the mortgage is actually a solution to [household debt] to a certain level,” she said, noting individuals can drive down the interest rates they’re paying on credit cards from 18% to approximately 3% by consolidating that debt into a mortgage.

But Vickery emphasized any savings gained by this approach should be used to pay down the mortgage or contribute to RRSPs and other savings vehicles.

Vickery also noted that, even before the government’s new changes, mortgages were given out far less readily than consumer debt, and subject to far more rigorous standards.

“When a lender approves a mortgage, we have to qualify them based on their income and their ability to service that debt and ratios,” she said. “We have to prove that income – are they actually earning that income and how long is it for?”

In contrast, she said, many credit card or “buy now pay later” plans hinge only on a credit score.

“If [applicants have] got a good credit score and they sign giving permission to do a credit score, [these companies] don’t even verify their incomes or their ability to service the debt and [the applicants] get the financing,” she said.

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Contact Joanne Vickery for further comments through:

Media contact:

Madelaine Hatch

Granville Communications

604 720-5185

mhatch@granvillecommunications.com

About MBABC

MBABC represents member brokers in BC and serves as the province’s industry voice with government, regulators and media. The Association strongly supports and facilitates the highest levels of ethical and professional standards and co-operation in the mortgage industry. Each member must abide by the Association’s strict Code of Ethics. MBABC actively supports its members through professional development and networking opportunities. It supports government policy that encourages small business and home ownership, and is committed to raising consumer awareness about the mortgage broker industry. MBABC is governed by an elected Board of Directors and an Executive Director.

January 17, 2011 (Vancouver) – Finance Minister Flaherty’s announcement this morning of tighter mortgage rules continues to emphasize mortgage debt as the culprit for record levels of household debt. However, these changes affect high ratio mortgages only, a very small part of the mortgage market. The real issue says the Mortgage Brokers Association of BC (MBABC) is growing consumer lines of credit, consumer loans, car leases and credit cards, and the unsecured lending practices of these lenders, not what homeowners are doing with secured mortgage debt. The new rules will primarily affect new and younger homebuyers, a demographic which does not typically shoulder high consumer debt.

Mortgage lending is not creating the problem of record levels of household debt, consumer debt is, according to the MBABC. By the time consumers need to refinance their mortgage, consumer debt already exists. A mortgage refinance can often be a solution to a homeowner’s debt issue, and these new changes reduce the effectiveness of this solution. It does not, however, resolve the main issue of consumer debt, which started the problem to begin with.

“Household debt loads are directly related to these unsecured debt factors, not mortgage lending”, says MBABC President Joanne Vickery. “Further tightening of mortgage rules is not necessarily the right answer. Consumers need to have the discipline to change their financial habits and to not take on debt that they cannot afford.”

“Consolidating household debt and rolling it into a mortgage is a smart option for an initial solution”, says Vickery “provided that any savings are then used to pay down the mortgage or invested into a retirement savings vehicle. Consumers cannot, however, continue to use their home as an ATM; they must change their habits on acquiring consumer debt.”

Vickery advises homeowners and those looking to buy a home to contact a qualified MBABC mortgage broker for assistance with determining home affordability as well as long-term debt planning and debt management.

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Contact Joanne Vickery for further comments through:

Media contact:

Madelaine Hatch

Granville Communications

604 720-5185

mhatch@granvillecommunications.com

About MBABC

MBABC represents member brokers in BC and serves as the province’s industry voice with government, regulators and media. The Association strongly supports and facilitates the highest levels of ethical and professional standards and co-operation in the mortgage industry. Each member must abide by the Association’s strict Code of Ethics. MBABC actively supports its members through professional development and networking opportunities. It supports government policy that encourages small business and home ownership, and is committed to raising consumer awareness about the mortgage broker industry. MBABC is governed by an elected Board of Directors and an Executive Director.

September 1, 2010 (Vancouver) – With mortgage interest rates declining steadily over the last thirty to forty days, BC is not in an environment where any housing bubble is likely, reports The Mortgage Brokers Association of BC (MBABC).

Yesterday’s report by the Canadian Centre for Policy Alternatives bases its report on a “what if rates rise” scenario and urges mortgage rate setters to put the brakes on rates. The MBABC calls for some deep breathing. “Interest rates are not going anywhere for the time being and a housing bubble is just not in the picture”, says MBABC Director, Jared Dreyer. “Current economic indicators do not forecast an increase in rates. And, with the GDP at 2%, no increase in prime is expected. With mortgage interest rates at historic low levels, housing continues to be affordable.”

Dreyer goes on to say that, “Canada Mortgage and Housing reported only a 6.2% decline in sales since 2009, and predicts only a 3% decline in sales through 2011.” Low interest rates are expected to continue until Spring 2012. Dreyer also suggests that maintaining the current strict lending policies continues to make housing affordable. “Only a small percentage, less than 5%, of mortgages in Canada were US or sub-prime mortgages.”

Detailed mortgage financing and current real estate market information, together with a listing of qualified brokers can be found at www.findabettermortgage.ca.

Jared Dreyer is available for interviews and can be contacted through:

Madelaine Hatch

Granville Communications

604 720-5185

madelainehatch@shaw.ca

About MBABC

MBABC represents member brokers in BC and supports enhanced professionalism, ethical and professional standards and co-operation in the mortgage industry, while elevating consumer awareness. The MBABC supports government policy that encourages small business and home ownership. MBABC broker members provide consumers with home financing expertise and mortgage options.

The HST applies to “new” residential housing (a smaller percentage of overall sales throughout the province) and the government is promising HST rebates which will be 71.43% of the provincial portion of the HST, up to a maximum rebate of $26,250. Used (i.e., resale) residential housing is not subject to HST. Home purchasing services such as lawyer and notary conveyancing costs, home inspections and title searches will be subject to HST. Realtor fees will also be HST applicable, which will result in slightly higher costs for the seller – not the buyer.

A recent housing forecast from the Canadian Real Estate Association speculated sales will decrease by around 3.5% nationwide in 2011.

MBABC President Joanne Vickery says, “Vancouver is coming off a hot housing market as home sales were high during the winter period. With continuation of the lower interest rates, softening prices and higher inventory levels, our organization believes the current market is transitioning from a ‘seller’s market’ into a more balanced market. And for the time being, mortgage demand will remain steady.”

Joanne Vickery is available for interviews and can be contacted through:

Fusion Communications Group

604 913-8810

604 308-5785 (cell)

jenn@fusioncommunicationsgroup.com

About MBABC

MBABC (www.mbabc.ca) represents member brokers in BC and supports enhanced professionalism, ethical and professional standards and co-operation in the mortgage industry, while elevating consumer awareness. The MBABC supports government policy that encourages small business and home ownership. MBABC broker members provide consumers with home financing expertise and mortgage options.

For comprehensive mortgage information and to find a qualified mortgage broker visit www.findabettermortgage.ca.