Mortgage 101 – Canada’s Mortgage Landscape | December 11th, 2023

In our next segment of Mortgage 101 live from City News, Clinton and Todd are joined by Chris Turcotte, President of CENTUM Financial Group to answer listener questions. They discuss mobile homes, where the Canadian market is standing currently, supply and demand challenges, mortgage renewals and rate extensions.

Todd Veinotte 00:05
Clinton Wilkins is in the house and he’s brought along his entourage. And among the entourage is Chris Turcotte, who’s president of Centum Financial Group, Chris. Hello.

Chris Turcotte 00:15
Good to see you again.

Todd Veinotte 00:16
Yes, indeed.

Clinton Wilkins 00:17
Thanks for coming on our show.

Advice for mobile homes

Todd Veinotte 00:18
Yeah, it’s indeed thanks for coming on. So what we’re going to do is, we’re going to take some calls, if you’ve got some questions for these two gents. So I’ll just read one of these ones. It says I want to see about buying a small mobile home as I want to get away from renting. But although I have a good income, I’ve heard it’s next to impossible to get mortgages or loans as a single-income earner. Any truth to that? And should I wait until the housing market cools more?

Clinton Wilkins 00:46
I think like, I’ll speak to this one. We are not in the mobile home financing business, personally. I would recommend you going to, you know, seek advice at a local credit union or maybe Royal Bank. You know, I think for us like we are very, we like to stay in our lane. I love to do mortgages for everybody, but I can’t do every single transaction. And mobile homes are just outside of the scope of lenders that we do business with.

Chris Turcotte 01:09
Actually, the thing I’d add there is where I was from originally did a lot of them. So for the person asking the question, it’s not just about the rate, it’s not necessarily the economics of the rate right now. Also, with mobile homes, there’s a calculation for the economic life of a mobile home. So it’s actually, the general rule of thumb is 40 years minus the age of the mobile home in most, in most credit union handbooks. So if you’ve got an older mobile home, even though the price is lower, you might actually have very limited years to pay that off. So to Clinton’s point, best to go to a lender and that’s what I love about an unbiased mortgage professional he could he could have tried to do it. But no, it’s in the best interest of the consumer. Go to a credit union that’s gonna walk you through that.

Clinton Wilkins 01:50
Yeah, I’m not an expert in mobile home. So I won’t even venture but I know, credit unions for sure. And I’d also try Royal Bank, I think those are kind of the lenders that I would try first for sure.

Canadian housing market updates

Todd Veinotte 01:58
Before we carry on with questions, Chris, we were going to do this a bit of a market update, a snapshot of what the country looks like. What can you tell us? We know that here in Halifax, we know what’s going on with the market. What are other areas looking like?

Chris Turcotte 02:11
Yeah, you know, it’s a great question. And it’s super interesting based on where we are in the country. So like through the prairies, we were speaking before we went on, I’m originally a prairie boy for Manitoba. So you know, Saskatchewan and Manitoba, not necessarily as impacted. Yes, it’s more expensive, but people are not getting blocked out of homeownership. As a result of higher rates, I think the prairies are much more similar to Halifax 100%. If you’ve got if you’ve got a two, if you’ve got a two family household income, you have payments going up substantially than it would have been maybe two years ago. But it’s not stopping you from the dream of homeownership. In the Toronto’s in the Vancouver’s where you couldn’t find a home for under 1.5 million, it’s unrealistic that at today’s rates, you need a household income of $450,000. It’s not real life. So because of that the dream of homeownership has been on hold for a lot of people in those bigger centers. As a result, you’ve seen prices come down, but not as much as you’d figure they would, given the fact that a one or two year fixed rate now. You’re you’re you’re nearing 7%.

Todd Veinotte 03:12
So why do you think it’s not as much as they should?

Chris Turcotte 03:15
I think there’s, there’s there’s a variety of reasons, I think.

Clinton Wilkins 03:19
Like are just sellers holding on? They’re not that desperate yet to sell if they’re looking to do a transaction. But it’s still a seller’s market in a lot of places.

Todd Veinotte 03:27
But they need a place to live after they sell they still need to go to live somewhere.

Supply and demand of a mortgage boom

Clinton Wilkins 03:30
Oh yeah, for sure. I mean, I think that’s a bit of a challenge. It’s a supply, I think its supply issue as well.

Chris Turcotte 03:35
Yeah and I think, unfortunately, you don’t have to be doom and gloom. But I think that cheques in the mail. You know, we’ve got 60% of mortgages coming up for renewal in the next three years.

Clinton Wilkins 03:44
Yeah, we just had Brenna on and she said, like 4 million mortgages or something that are coming up even like between now and next year, which is just a huge, huge number.

Chris Turcotte 03:51
So especially in those big centers, imagine if you might have bought or renewed when your interest rate was like one and a half percent. And now yes, we know that the mortgage charter you guys spoke about is potentially coming for relief. But that’s not going to change the fact that you have to, you have to be able to pay the payments at 6%. You know, if you’re 4 or 5x, the interest cost, I think that’s when you’re going to start to see the dramatic price increase, because people are going to have no choice but to sell, when you’ve got to figure out how you’re going to make your basic mortgage payment. That’s when things are unfortunately going to get interesting.

Clinton Wilkins 04:24
I don’t think we’re they’re Todd. I’m seeing people coming up for renewal, yes, they’re in hard shape. And yes, we are extending their amortizations in some cases, but we’re not seeing people in Halifax needing to sell because their mortgage is coming up for renewal and the rate is too high. But I think that certainly is happening in Toronto, Vancouver, Chris, I don’t know have you been hearing those type of situations?

Alberta’s real estate market is strong despite challenges

Chris Turcotte 04:42
There’s a lot more pro bono counseling in the broker community there because that is the question on the back of it, at the forefront of everyone’s mind. I’m okay right now, but if this situation doesn’t improve, what’s my renewal gonna look like in a year and a half. And should we consider selling should we consider downsizing? So it’s getting really interesting. Todd to answer your question there on the on the last kind of like, province, what’s always interesting is Alberta. Alberta is a cycle right? Oils good. Everyone buys a dually truck with a, you know, $1200 payment, and everyone’s rich. And you know, when oil is down it’s –

Clinton Wilkins 05:19
It’s the worst of times.

Chris Turcotte 05:20
It’s the worst of times and right now oil is up. So what’s really interesting is the Alberta community really has this like nice little like forcefield around it, where the real estate economy is really, really strong right now. So there’s some economic impact that’s unique to that province in particular, where it’s actually seeing growth year over year, which is fantastic to see. So it’s –

Clinton Wilkins 05:43
It’s a mixed bag by the sounds of it.

Chris Turcotte 05:44
100%.

Mortgage renewals and government intervention

Todd Veinotte 05:45
Via email, Mark asked this, it says our mortgage will come up for renewal before long, given the financial times we find ourselves in, is it prudent to try to negotiate with their financial institute? Or is it wishful thinking? And the question goes on to say also, how much power does our government have in pleading with big banks to help Canadians as it pertains to mortgage rates?

Clinton Wilkins 06:06
So I think I can take this one on. You can certainly ask your lender for, you know, a better price, I think that’s always great. But what we talked about with Brenna was even switching from lender to lender to get a better rate and term for you. And I think everybody situation is different, I can tell you, we’re certainly seeing an uptick in customers wanting to take a variable rate mortgage product right now, if they can qualify, because really, that perception is, the rates are going to be lower in the coming months and years. You know, I think traditionally, Canadians take a five year, and 60% of Canadians have had a five year term. And that certainly has been a major shift over the last period of time, I would say the most popular products we’re seeing right now are like a three year fix. People are kind of waiting and seeing and hoping that the rates are going to be lower in a couple of years. But I think the people that can qualify and have a little bit of more risk tolerance, variable rate mortgages are certainly more popular than they were even 6 months ago.

Todd Veinotte 07:01
Okay.

Chris Turcotte 07:02
I think what I threw in there for Mark is he said something interesting, where he was like, do you think the government is going to help? We got to remember, we remember that. It was it was Tif Macklem himself. In July of 2020 –

Clinton Wilkins 07:15
The rates are going to be low for the, you know –

Chris Turcotte 07:17
Exactly, rates are going to be low for a very long time. So if you’re renewing, or you’re about to get into market, don’t worry, rates are gonna be real low for a long time. And rates have gone up by 5%. Right. So you know, Mark saying is the government going to do something? Yes but as we’re seeing with a mortgage charter, they are strictly reactionary. So my advice from you know, I’m not in the market, I’m not doing mortgages. It’s as simple as that. Yeah, you can go to your bank and hope that they get their best. Or you could go to an unbiased professional that plays with every bank. And I just think in this market, it’s more critical than ever now, that you have somebody unbiased, that’s going to give you all of your options. It’s more critical than ever. It’s not just about rate right now. You gotta plan for that.

Todd Veinotte 07:58
Okay, 902-456- 6000, Stu hello.

Stu 08:02
Hey, Todd, how you making out?

Todd Veinotte 08:03
Doing well, go ahead with your question.

Stu 08:06
Alright. I have a question for the mortgage gurus there.

Todd Veinotte 08:09
Sure.

Rate extensions and why you need to seek advice before renewal

Stu 08:10
So my renewal with Scotiabank is coming up in October of 2024.

Clinton Wilkins 08:14
Okay.

Stu 08:16
Right now we’re currently at 2.3. Not looking to pay any more than what we’re paying now. How would you go about asking your bank for an extension on your current rate? Is that possible?

Clinton Wilkins 08:27
No, you are, you’re out of luck. And some lenders have been in the pricing game. And some lenders have been out of the pricing game. What I’d recommend in your specific scenario, is you need to start having a conversation with an unbiased mortgage professional 120 days before your renewal date. Not all lenders are the same right now for pricing. So you’re not going to get 2.3%. But you might get better than what your current lender is offering you. Specifically in a situation if we can do something called an insurable transfer. So that would be leaving your existing lender and transferring to another financial institution, I think leveraging you as a new customer, you’ll be able to get better pricing. You’re not going to get 2.3. And they’re not going to extend your term. But I think that you’ll be able to get better than what your bank branch will offer you. So certainly figure out what that 120 day period is, prior to the renewal date. If it’s October, you’re looking at a date in June. And I think setting up an appointment with an unbiased mortgage professional, and they’re going to give you some advice. So just make sure you mark your calendar.

Stu 09:29
Do you have you? Do you recommend for that?

Clinton Wilkins 09:33
I mean, you can give us a call or any advice mortgage professional in your area.

Todd Veinotte 09:36
No give Clinton a call. Just give Clinton a call. I mean, that’s safe to say.

Clinton Wilkins 09:40
Yeah we’ll get Vanessa to give you our info. You can check us out online. It’s a great place to start. And we can even point you in the right direction.

Todd Veinotte 09:46
It’s teamclinton.ca is where they’ll find you right?

Clinton Wilkins 09:48
Teamclinton.ca, you can find out all the information there on our site and I would say June is going to be the time that you’re going to want to connect

Todd Veinotte 09:54
Give them a call Stu, get a hold of them. They’d be happy to help you out.

Stu 09:57
Alright. Thanks, guys. Have a great day.

Todd Veinotte 09:59
Alright take care. 902-405-6000. Don’t be so, don’t be so humble.

Clinton Wilkins 10:04
We’re here to educate. But I mean, if people want to call us, Todd, I can tell you, we have a lot of listeners that will reach out to me just for a little piece of advice. And, you know, yes, we’re in this for business. But we’re here to educate people. And I can tell you, I’ve told so many consumers, you know what, it doesn’t make sense for me to do a transaction, you need to go back to your lender and do this for one year, and then come back to me. You know, we’re really in that advice business. And this business is about sustainability. Over 60% of the customers that we deal with every day in our office are repeat and referral from repeat. So I think that speaks just to the quality and the advice that we’re able to give.