Mortgage 101 – The Interest Rate Impact

Todd Veinotte and Clinton Wilkins discuss the current state of the mortgage market, highlighting the busy spring real estate season and the impact of interest rates.

Todd Veinotte
Welcome back to Mortgage 101, your guide to home ownership with me, Todd Veinotte and our mortgage guru, Clinton Wilkins. What a treat it was to have Keith Kenny in.

Clinton Wilkins
It was refreshing. I love having people here in the studio. We can’t have a guest on every time, but we could, but we don’t. We choose not to, because there’s so much for us to talk about. Normally, we could have a three-hour show, and I joke with Todd. I’m like the next time he’s off, I’ll come in and do his show. I just open those lines and we just go, go. I just go wild with the open deal with the open hour. But Keith brought a wealth of knowledge, and spring is one of the busiest times in real estate. So I’m really glad we got a good kind of state of the nation from what’s going on in Halifax. I kind of took the impression that it’s pretty good news about what’s going on. I don’t know if that would have been the same if we had that same update last April. I don’t think we would have so anyway, it’s good, I can tell you, in mortgage lending, it’s very busy, and one of the things that we’re talking about the most right now is what is going on with interest rates. They’re definitely on their way down. But there’s just so much uncertainty with what’s going on with the federal government. We’re an election cycle. What’s going on in the US, and how is that going to impact things? What I can speak to is what we know right now, rates are on a downward trend. Typically, when they’re on a downward trend, they will continue going down until we get to a place where they’re going to be stable, they’ll be stable for quite some time, and then the rates will go up, typically when inflation goes up, and they need to stop and they need to slow in inflation again, the one uncertainty is the inflation numbers were out, and inflation is up. And I think that was maybe a little bit artificial with this HST holiday that we had earlier this year. So it’ll be interesting to see. With the changes, with the carbon tax. There are just so many little things that are impacting things that. The current prime minister, Mark Carney, is going into the election. There are a lot of things that are going to impact what’s going on right now, what I’ll say to people is, I think the bank can is going to continue to lower the key overnight rate. A lot of economists think we’re going to see that the rate will be 50, 75 basis points less, but the rates are way down. We are getting interest rates sometimes as low as 3.99. Right now, the rates are four and a quarter, four and a half. The rates are way lower than they were a year and two years ago. There’s not going to be some big revolution or something that the rates are going to be back at 1% I don’t think that’s going to happen. I think rates are in a more stable environment. I think they’re going to continue going down, but I don’t think they’re going to be going down. So I think you need to be happy with what you get. And I think if you’re gonna choose to transact with someone, if you’re gonna choose to transact with your bank, you’re gonna choose to transact with your unbiased mortgage professional, be loyal to that person. Get the advice that works for you. I think of developing a relationship. I think the relationship is more important than anything else. I think the relationship is key. And I think there’s just so much noise that people hear that they’re like, why do you talk to this? And you talk to this it and it almost gets to a situation that people just can’t make a decision.

Todd Veinotte
I would add to that, though, Clinton, that develops a relationship, but also know that one relationship is working for you.

Clinton Wilkins
I mean, I think that’s on both sides, exactly you need to have someone that you’re going to trust and that you’re going to stay with them. It’s not a one-and-done, at least for us. I’ve had clients that I’ve been doing business with for literally 20 years, and these clients are loyal, but not blindly loyal. I’m not blindly thinking that they’re just going to trust me carte blanche, we’re going to do the best for them, for their specific scenario, but their situation also changes, and the advice that I give them today may be different than it is a month or two from now, but mortgage lending is a snapshot in time.

Todd Veinotte
But does anybody go through the effort that you do when it comes to the annual reviews, and then look, I’m not going to pump your tires here, because we are. We know that we do a good but I agree. But with your outreach, with your media, with your home buyers guide. I mean, all of that stuff that costs you money, right?

Clinton Wilkins
Big money. If we didn’t care, I wouldn’t bother. If a lot of people didn’t do it, if I didn’t care, I wouldn’t even do this show. A majority of the people who are listening to our show, Todd, are not clients, right? And, yeah, they could become clients. We’re obviously for, we’re for-profit business. We’d love to have more business, but we do this because it’s education, and I think a lot of clients value it. That, yeah, are we going to be the absolute lowest rate on the street? Probably not, because, guess what, someone will always do it cheaper. It doesn’t matter what industry you’re in. It doesn’t matter if it’s mortgage lending, if it’s a lawyer, if it’s construction, someone will always do it cheaper. But it really sometimes is a race to the bottom, and if it’s, if your number one goal is just about rate and you don’t want a relationship, well, we are probably not going to be the right place, because we are very involved in our clients, and we’re involved in that advice piece, and I’m involved in their lives, oftentimes for like, 25 years plus, because we see these mortgages to the end. And I think the relationship right now is just so important. People are worried. They need some hand-holding. But I think that being said, when you get the advice, make sure you’re on the same page as your mortgage professional, and then decide you’re forging forward, I think there’s a lot of uncertainty. Be like, I’m forging forward. Oh no, I’m not. And I think it’s just that you need to know what your options are. And I think getting more than two or three options is too many. We like to say, Hey, this is the way I think it should proceed. Here are a couple of other options, and here’s why I think we should proceed. We ask a lot of questions, and I think we ask a lot more questions than maybe most places do, but it’s really about finding the best fit. And that’s not just rate, sometimes that’s amortization, it’s product, it’s lender. We need to get a lot of information in to be able to put that together and give people the best possible solution.

Todd Veinotte
And you also make a lot of effort when it comes to your staff, when it comes to educating your staff, making sure your staff go on training and all of that stuff.

Clinton Wilkins
We have a whole army of people in the background. I think that’s what’s cool. For example, today, I was in calls, and a client called, they had a shortfall, for example, and my system was able to field the call, talked through the solution, and it was the same advice that I would give, and really, that’s my goal. If someone comes in and they’re dealing with anyone on my team, I want to make sure that they’re going to have the same experience as if they were dealing directly with me. I think that should be everyone’s goal, especially when you’re dealing with a small business. I want people to fly my flag, and I want to make sure that it’s customer first, and it’s advice first. And I think a lot of our clients, that’s what they appreciate more, so that one basis point off the rate, that makes no difference.

Todd Veinotte
Also, you often talk about being people, being proactive. Don’t ostrich, and deal with the problems, deal with the issues, and have the conversation. Always better to have a call.

Clinton Wilkins
So here’s an example. Todd. We’re coming out of a higher rate environment. We’ve done a lot of fixed-rate mortgages over the last couple of years because people were uncertain. We are calling hundreds of clients that have interest rates in the 5% and the 6% range, and we’re talking to them to say, Hey, you’re gonna have a pretty big penalty client, but we can get you a rate in the fours, and that’s going to drastically reduce your payment. Yes, considering the penalty, you’re not going to save any money here, but it’s going to lower your monthly output. And right now, clients are most concerned about the interest rate. I can tell you, nobody else is calling you to say, hey, well, you think we should, you should do a midterm refinance. Yeah, it’s great for business, but it’s the right advice for the customer. Not everyone wants to do it. Yeah, we have clients. Some clients have interest rates at 6% that were two years ago. That was the going rate. But, I think it’s talking to them, figuring out what their needs are. And in some cases, some people are struggling. They’re struggling with the cost, and they’re struggling with the monthly payment. If we can do something, even if it generates a penalty, having a lower payment for people sometimes is the right solution. But these are things that we’re doing proactively, and this doesn’t come for free. We have to put a lot of manpower into doing this, to people, to having these conversations with clients. It’s gonna be rewarding, though I would think, I have so many rewarding conversations with clients every single day, and I think that’s what keeps me doing this. I said to someone the other day, I love mortgage lending more today than I did 20 years ago when I started. And there aren’t people who can say that about what they do. And I use this adage, if you love what you do, you don’t work a day in your life, and that’s really how I feel.

Todd Veinotte
How do people get a hold of you, Clinton?

Clinton Wilkins
People can check us out online at TeamClinton.ca/radio. There are hundreds of blog posts on there, links to our social accounts, and you can check our podcast out on Spotify or Apple Music, and you’ll be able to see us on the NewsRadio.

Todd Veinotte
Website as well. And it’s always great to be able to see us because we’re damn handsome.

Clinton Wilkins
Here’s the thing, we might be a little biased, though, but we’ll be back next month end.

Todd Veinotte
All right, that’s Clinton. Mortgage 101, your guide to home ownership. Thanks so much for listening, everybody. We appreciate it. See you next time.