Mortgage and Housing Industry News – Insight from An Expert

Mortgage and Housing Industry News – Insight from an Expert

 

As part of Ownest’s commitment to staying on top of the latest industry trends and innovations, we recently attended a webinar by economist and housing expert, Will Dunning. We are pleased to bring you some highlights from the presentation along with some interesting statistics.

 

Highlight Summary

  • Lower rates are driving up home prices across Canada, yet home ownership is still affordable in Alberta, where the combination of low interest rates and lower than average home prices makes Alberta a good place to buy.

  • There was a big shift away from variable mortgages in 2020, simply due to extremely low fixed rates.

  • Usually, past trends give reliable clues about what might happen in the near future. That is not the case in these abnormal times: data on sales has been inconsistent and this may continue. Despite CMHC’s changes to debt ratio policy, which cut homebuyers’ purchase power by up to 11%, and the stress test introduced earlier in the year, there has been a temporary spike in home sales in many places in Canada.

  • What are the implications for mortgage policies of COVID-19? The greatest risk for the mortgage market during the pandemic is loss of ability to pay, not changes in payments.

  • The changes to the stress test were supposed to decrease delinquency rates on mortgages, but the policy has not unfolded as expected. Canadian Bankers Association data shows that of the 795,000 clients who were given mortgage flexibility, 498,000 resumed payments as of September 30, and no doubt more resumed by the end of November. However, a large but unknown number have not yet resumed payments.

  • The direction of ownership rates has reversed due to regulatory changes made in 2016. These changes included lower amortization requirements and higher down payments, which have led to a decline in the overall rate of home ownership.

 

Buyer Insights

  • What is the primary source for down payment for first time buyers? Unlike prevailing thinking, it is not the “Bank of Mom and Dad” but rather it is savings, including RRSP’s.

  • What is the relationship between employment trends and the housing market? The housing market usually takes 3-4 years to catch up to major employment trends. For example, if a person changes employment, they likely will only then begin working towards saving for a down payment, with home ownership following three to four years later.

 

Will Dunning is Chief Economist for Mortgage Professionals Canada and has specialized in the analysis and forecasting of housing markets since 1982. He also operates an economic analysis consulting firm, Will Dunning Inc.

 

Meet the Team – Audrey Wilson

We’d like to introduce you to some of the great people who work behind the scenes at Ownest. We recently spoke to Audrey Wilson,
VP Operations and Ownest’s Broker of Record.

 

1. Tell us about your role at Ownest.

My role is VP Operations which is in my opinion a great role to have as I get to work with every area of the company and facilitate the how and why of every project as well as the overall Ownest product. I work closely with our CEO, CRO and CTO, each team manager and connect with each team member on some level. I guess you could say that I’m the center hub of the company.

2. What did you do before you joined Ownest? What interested you in Ownest?

I have been in the Financial/Mortgage Industry since 2003. I started out as an administrative assistant-underwriter-operations manager, and I’ve been with Ownest from the beginning and have worked with our CEO since 2003. I have always been involved in various business areas of sales, marketing & promotions, and building strategies through process in my life so far.

Ownest is innovative and always striving to solve current problems in industries. As a company, they are not afraid to try something new, willing to reinvent themselves by balancing other businesses and people’s needs. I am very fortunate to have the opportunity to work for an innovative company that aims to disrupt the traditional financing industry as we know it.

3. What do you like most about working here?

Working with an amazing group of people who are team members but also are family members. Everyone is considered to be part of a family and we are respected. We all are valued as individuals, as teammates and I love that our voices are heard!

4. What excites you most about the future of Ownest?

This company has huge potential to do great things, always evolving through learning and listening through its partnerships and what is going on in the world today not just in the financial industry. Looking to define the future of financing.

5. Which of the Ownest Values do you most identify with, and why?

To be honest it’s really hard to pick one. Fun would be the #1 because if we are not having fun, enjoying life, the people we work with then change needs to happen. Everyone must love who they are and enjoy everything offered by life.

6. Tell us about your life outside of Ownest.

I grew up in a small farming community, born and raised Albertan and come from a family of 5 kids with 4 brothers and myself. Being the only girl and the middle child, helped me hone my observational and negotiation skills. I guess you could say I was right in the middle – or in the hub – of that dynamic, too.

I have been blessed with one amazing daughter who is now a teenager… She is my world and I am grateful to have this life journey with her. Plus, I am looking forward to these years as I know how I challenged my parents at that age. Hopefully, there is no payback (haha).

I love to travel and have been fortunate to spend time with family in my travels as well as on my own. Some of my favorite places were Hawaii, Greece, Thailand, Scotland, and Turkey – just to name a few. I have a very large travel bucket list with the goal of getting to as many as I can. I want to venture to places like New Zealand, Spain, Portugal and Argentina because I love food and to experience different cultures and their history.

7. Any hidden talents?

My memory is like (probably better than) an elephant. If you want to know something even if it’s 5-10 years ago, what day, what time and the conversation around a circumstance, then ask me. My family probably has stopped disagreeing with me about past events – they know what they’re up against.

8. Who inspires you or which company do you admire (and why)?

People inspire me! I love to learn different ways of thinking, looking for the good in all. My youngest brother Jonathan is a huge inspiration to my family as he lives in the moment every day and shares unconditional love with everyone he meets.

Others who inspire me are: Carl Jung, Brene Brown, Joe Dispenza, Don Miguel Ruiz and Albert Einstein because they challenge us to think “why and how” and bring awareness that causes me to seek to understand. One of my favorite quotes by Maya Angelou: “You are only free when you realize you belong no place- you belong every place- no place at all. The price is high. The reward is great.”

9. What piece of technology can you NOT live without?

My computer for sure! It holds my life!

10. If you had a superpower, what would it be?

This is a tough one. I’d love the ability to read others minds and know what they are feeling.

11. Anything else you’d like to share?

I love to curl (and watch curling), motorcycles, reading so many books, dance like no one is watching and spending time with the people I love!!! I am also a strong believer in listening to my intuition.

This year, I decided to jump out of my comfort zone by challenging myself to do something that I was too afraid to ever do and stated for years that I would never ever do: Skydiving.

It took me 25 minutes to reach the altitude of 13,500 ft and only 8 minutes to land safely! It was the most amazing thing I have ever done in my life and it really forced me to step outside of my comfort zone. This experience helped me realize that sometimes you just have to trust yourself at all times and know “I’ve got this.” I’m confident that I can handle anything when I put my mind to it!

The Five Cs of Credit and Why It Matters

The Five Cs of Credit

and Why it Matters

 

What Are the Five Cs of Credit?

The five Cs of credit is a set of criteria used by lenders to gauge the creditworthiness of potential borrowers. This type of approach weighs five different characteristics of potential borrowers and conditions of the loan, to help predict the chance of potential default and overall risk or loss for the lender.  The Five Cs are: Collateral, Credit, Capacity, Capital and Character.

Ownest's software verifies credit using the Five Cs of credit

 

Why is it Important to Use the Five Cs of Credit?

Evaluating a borrower’s creditworthiness based on the Five Cs of Credit is important because it gives the lender a better overall picture of the borrower and their ability to pay off the loan. It also takes into consideration the more “personal” side of financing by considering the borrower’s character, as opposed to simply looking at past credit history and collateral. For example, if the credit check reports a default payment, it could have been due to unique or rare circumstances, such as an illness or divorce. These types of questions will help lenders understand the borrower’s credit – looking back to the credit history and looking forward to the client’s future capacity.

Save Time: Ownest’s Software Automatically Calculates the Five Cs

One of the biggest challenge when it comes to financing is knowing the actual creditworthiness of a potential purchaser or borrower. For example, if someone is interested in purchasing a home, the sales associate spends a lot of time with the customer during the sales journey. Waiting for a mortgage approval can take 7 – 10 days, and in the meantime, your sales team is spending valuable time building a relationship with a client who may not be approved for financing.  Wouldn’t it be nice to know this information at the beginning of the sales journey?

Ownest’s Pront-O app instantly pre-qualifies and intelligently screens
applicants based on their actual borrowing ability.

 

 

The software performs a soft credit check using the Five Cs of Credit, then sorts and ranks the leads by  summarizing the information in an easy-to-read stoplight snapshot (green, yellow, red rating system). This data  empowers our affiliate and lender partners with key insight and visibility of the borrower’s overall credit profile – faster and more accurately than any other software on the market – so you know where you’ll get the best return for your sales efforts.

 

How Much Time and Money Will You Save?

 

Whether you’re a lender or a company that offers financing for your products, Ownest software can provide valuable insight and streamline your sales process. Pronto’s pre-qualification capabilities are just one of the many features of our revolutionary software. Contact us to schedule a demo today!

Request a demo of Ownest Software

 

New CMHC Lending Criteria

Ownest has in-house mortgage experts

 

 

On June 4, 2020, CMHC announced changes to their underwriting criteria, which will impact sales in some parts of the new home sector. How does this affect home builders, realtors, mortgage brokers – and home buyers?

What are the changes?

  • Credit score requirement increasing from 600 to 680 Beacon;
  • Flex down mortgages are no longer available (no more zero down mortgages);
  • Stricter Debt Servicing Requirements.

When do these changes take effect?

  • July 1st, 2020

Why are they Changing the Criteria?

  • The COVID-19 pandemic, related job losses, business closures and a drop in immigration are adversely impacting Canada’s housing market.
  • CMHC states that these actions will protect home buyers and reduce government and taxpayer risk while stabilizing the housing market.

What do these Changes Mean on a Practical Level?

  • If you have deals in the pipeline, get them to apply for a mortgage NOW. Clients will need to be approved by the lender and insurer (CMHC) prior to July 1st in order to qualify under old rules. After July 2020, there will be more restrictive requirements for credit and debt servicing.
  • For example: For a purchase of a $350,000 house with 5% down the requirement for income is $73,571.13, after the changes the requirement will change to $81,979.26. This will have a significant impact on income requirement.

What can you do to assist your buyers using CMHC?

  • Any clients with lower credit scores, unsure of their direction should firm up purchasing now.
  • Any clients with a little extra debt with the requirement of more flexible guidelines should firm up agreements now.
  • Try to secure new home upgrades as soon as possible to avoid big material changes that require re-approval closer to possession as it may cause an issue.

It is important to note that this is not a directive from the Ministry of Finance, so Canada’s private mortgage insurers such as Genworth and Canada Guaranty are not adopting the new mortgage rules.

Ownest is Here to Help

Ownest’s team of in-house mortgage experts are second-to-none and work with a large network of preferred lenders.

  • We will put in the extra hours necessary to ensure your clients’ needs are met.
  • Any offers submitted where approvals from lenders are obtained, we will ensure CMHC or other insurer approval is obtained;
  • Wherever possible, we will work with lenders that don’t require CMHC or other insurer approval after financing had already been approved, to help ensure your client has approval upon possession (some banks require resubmission closer to possession).

If you need advice or would like us to help you navigate the changing landscape of mortgages, we invite you to contact us and we’ll be happy to help.

Contact Ownest for Mortgage Advice