Global News Morning – back to basics on mortgage lending | November 3, 2022

In this news hit on Global News Morning in Halifax, Clinton Wilkins speaks to Alyse Hand about getting back to basics on mortgage lending, and what a mortgage broker does for borrowers. This is the kick-off for their Financial Literacy content!

Don’t feel like watching the video? Check out the transcript below.

Transcript:

Kicking off Financial Literacy Month

Alyse Hand: [00:00:00:14] Hey, welcome back. Well, this month, all month long, November is financial literacy month. It’s a month dedicated to help Canadians build financial resilience. And we’ll be having a few conversations with various guests over the next few weeks about financial literacy.

And we’re getting the conversation started this morning with, you guessed it from those visuals. You could probably figure it out. We’re going to talk about mortgages and mortgage lending with Clinton Wilkins. He’s back with us. He’s with CENTUM Home Lenders Limited. He’s live with us from Halifax. Hey, Clinton, nice to see you again. Good morning.

Clinton Wilkins: [00:00:30:05] Thanks for having me, Elise. How’s your morning going?

Back to basics: What do mortgage brokers do?

Alyse Hand: [00:00:33:10] Good, good. It’s great. And I’m excited to talk to you because I think I really want to bring it back to basics with this conversation. We’ve had you on several times. We’ve got into sort of the nitty gritty on different conversations and different topics.

Let’s start with, you know, those who are really just starting to learn about mortgages, perhaps your younger or you’re just looking at buying your first home in the next little bit. What does a mortgage broker do? What do you do in your role?

Clinton Wilkins: [00:00:57:13] Well, typically, home purchase is the biggest purchase of a consumer’s life, and typically buying a home is the biggest asset. And as for a mortgage, a mortgage is typically the consumer’s biggest debt as well.

So really what we do is we talk to consumers about their lending needs. We talk to them about getting a pre-approval if you’re buying a home. And for existing homeowners, we talk to them about renewals and refinances and maybe buying new properties.

So it’s really about that lending need and we’re doing kind of that one widget. But most Canadians, about 70% that are buying a home need a mortgage. So it’s certainly a big piece of the transaction and obviously it’s a big piece of what goes on in a household. And as we know, homeownership is part of the Canadian dream.

Why would someone need to use a mortgage broker?

Alyse Hand: [00:01:48:10] True. And when should someone be using a broker like yourself, Clinton versus going through a bank to get their mortgage? How do we know which one will be better for us?

Clinton Wilkins: [00:01:59:11] So for mortgage brokers, we are unbiased and we’re not using one lender, which I think is very, very important to note. We have access to sometimes 40 plus lenders. Now everybody’s situation is different.

When we look at a mortgage application, it’s made up of income, assets and credit. And as you can imagine, every single file is like a snowflake. So I think that’s really important to note.

Now we deal with some bank lenders and bank lenders that you would do business with every day. So I think it’s important that if you do want to get unbiased advice, then seek the advice of a mortgage broker. We can really shop from many different lenders and put your file together to give you that expert advice.

Why would I consider alternative lending?

Alyse Hand: [00:02:42:00] I want to talk about alternative lending, which, you know, you go through a mortgage broker, that’s alternative lending. What are some of the misconceptions out there about alternative lending? Clinton?

Clinton Wilkins: [00:02:54:02] Obviously with mortgage brokers, what we do every day and specifically in our office, about 90% is a bank transaction. So lenders that you would know. But obviously there are some files that don’t work with a bank lender.

And I think alternative lenders are even more important now, specifically due to the increase in the interest rates. So some people don’t qualify with a more traditional lender.

And sometimes alternative lenders are really great for consumers who are self-employed and maybe there’s not enough income on their tax returns to make the numbers work with a traditional lender. And sometimes also if that consumer may have some bruised credit or something, alternative lenders are great to jump in.

Typically with the alternative lenders, they like to lend more in the core areas of the province or the city. Sometimes they don’t lend in more rural areas and sometimes obviously in more rural areas, it’s tougher to achieve financing no matter what lender you’re with. So I think that’s something to certainly take into account.

How has the mortgage industry fared during the pandemic?

Alyse Hand: [00:03:55:11] I want to get into kind of our current state to where we are right now. Of course, inflation, interest rate hike just happened. What kind of hit has this taken on people like yourself, Clinton, and mortgage lending. How hard of a hit has it taken for you?

Are you seeing people coming in these days who want to get a mortgage? Is that even something that people can afford anymore? I guess you have to be in a certain elite position, I’m assuming, to get a mortgage right now.

Clinton Wilkins: [00:04:21:19] We are doing transactions every day, Alyse. Obviously, the rates have an impact on you and I. You know, if you’re in a variable rate mortgage, your payment has gone up or your amortization has gotten longer based on the last Bank of Canada increase, even where the fixed rates are at their very high now compared to where they were a couple of years ago.

I think that’s something to take into account and when we qualify someone, we’re qualifying them on a rate of 2% above their contract rate. So the affordability for what people can achieve today is less than it was six months ago. But that doesn’t mean that we’re not doing transactions every day.

Less transactions, but increased value in homes

I will say, Alyse, I think there’s less purchase transactions going on specifically in our market. And I can tell you, I’ve talked to mortgage professionals from across our country and they are certainly seeing less transactions. We are not so impacted here in Halifax and the Maritimes.

I think we’re more conservative and we’ve never really had that boom, in terms of the prices. Obviously the prices have gone up the last couple of years, but our average home price here is somewhere still around $500,000. So still very affordable compared to the rest of the country.

Have a great Financial Literacy Month

Alyse Hand: [00:05:33:16] All right, Clinton, we got to leave it there. Can you believe it? That’s 6 minutes just like that. But thanks for kicking off our financial literacy month. I know we’ll have lots more conversations, but great to see you again. And thanks for this, this morning.

Clinton Wilkins: [00:05:45:22] Thanks for having me, Alyse. I think financial literacy is really very important. I think this November, it’s as important as it ever has been. So have those conversations at the dinner table. Or at the breakfast table.

Alyse Hand: [00:05:55:23] Yeah. The breakfast table this morning. Clinton’s got some great tips up there for financial literacy month on the CENTUM Home Lenders Limited and on the Team Clinton Wilkins website.

If you have any questions, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.