Mortgage 101 – The Spring Market Has Sprung

In a brand new edition of Mortgage 101 live from CityNews, Clinton Wilkins and Todd Veinotte discuss the spring real estate market, finding the right lender for you, and what’s happening with today’s property taxes. They also discuss learning about fixed vs variable rates.

Clinton Wilkins 01:17
Could you imagine, Todd, we’re getting a little out of control here. Just like some people think the real estate markets are out of control or the rate environment, or a lot of people think the Bank of Canada is out of control.

Todd Veinotte 01:27
Wow, there’s a segue!

Clinton Wilkins 01:29
Let me tell you, I feel like we’ve done this before.

Todd Veinotte 01:31
So, the eleven he’s done, we’re getting down to business.

Spring Real Estate Market

Clinton Wilkins 01:33
We’re into real business. I mean, it’s Spring, that’s what we’re really here to talk about. As you know, the Spring real estate market is typically one of the busiest markets all year and what are we going to talk about today? Well, I think before we get down to business, I think you should introduce yourself because we’ve got new listeners all the time and we want to make sure anybody tuning in knows who you are and what you do. Yeah, I think we just assume everyone knows who we are because we’ve been on for so long. I’m Clinton Wilkins. I’m a mortgage broker here, we’ve offices in Halifax and Dartmouth. I’ve been doing this, we figured it out the other day – nineteen years. We’ve done over one and a half billion dollars worth of mortgages, like six thousand transactions. I always say I’ve seen everything, but every day, I think I see something new and that’s what makes my job really interesting. I’m happy to be here with our listeners, I’m happy to be a part of this CityNews community and those that are watching us after, on our podcast or on social media, thank you. We really appreciate the support you’ve given us and the encouragement and we just love our listeners that’s why we’re here.

Todd Veinotte 02:39
Yeah, absolutely. You’re all about education and that’s a big part of what you guys do. You just don’t bring a client in and it’s not just a transaction, right? It’s more than a transaction with you guys.

Clinton Wilkins 02:51
I think it’s a relationship. I think I’m in the relationship business. I think mortgage lending is probably the easiest part of what I do every single day and I think it’s everything else that’s more challenging. I think right now, it’s so, so important. I’m talking to a lot of new clients right now and I mean, 60% of what I do everyday is repeat, but you know, 40% I’m dealing with new clients and I’m talking to a lot of new ones. A lot of these clients that I’m seeing are coming out of the “Big Five.” They’re coming from other financial institutions, some of them have never dealt with a mortgage broker before and the reason they’re coming to us is really for that expert advice and I think that’s what excites me. That’s what gets me out of bed. That’s what’s really motivating right now. It’s springtime, it’s sometimes our busiest time of the year. I typically say from mid March until December is our busiest time, obviously, it ebbs and flows. But we can certainly tell you, there is a big, big uptick in the amount of transactions at least we’re seeing on our end.

Finding the right lender

Todd Veinotte 03:51
This may seem a bit basic, but again, we have new listeners all the time. What is the difference between a broker and somebody that you would go see in a bank?

Clinton Wilkins 04:01
I think that it’s great, and honestly, people still ask me that every day. When I started nineteen years ago, I think people weren’t as familiar with mortgage brokers. I think that consumers think you go to a mortgage broker when you can’t be approved at your bank. Now, we’re really seeing the customers that are very savvy. They want expert advice and sometimes, they want a more aggressive rate. They really want to make sure that they’re getting the best setup for their situation. Sometimes, it’s so easy just to sign your renewal. Sometimes, it’s easy to deal with that bank that you’re dealing with on your day to day basis. But I think the big thing is that there is more variety out there and I think there’s more differences between lenders today than there are similarities. I said that to a client today, even over the last four or five years, there are more differences than there are similarities. The rate that one lender gives may be very different from another lender. The product from one lender might be very different from the product with another. So I think thats what you need to remember, especially if you are looking to maybe change your setup or if you’re on renewal, or if you need some advice. I think it’s really important right now to seek the advice of an unbiased mortgage professional because there’s just so much going on. Even when we think about the economy, we think about inflation and the interest rates, not everyone’s still having a great time. But the clients that I’m seeing, people are getting through and I think here in Atlantic Canada, we’re so good at paying our mortgages. I hope those of you that have a lot of equity in your home and if your mortgage is becoming a bit of a struggle, that you’re seeking that advice because there’s always a solution, there’s always a way to make something happen.

What’s happening with property taxes

Todd Veinotte 05:40
One of the things that I wanted to ask you about when people are closing and they’re buying. People who have existing homes have a cap system on the property tax, so that the assessment is not reflective of a big jump. But when you buy a home that cap doesn’t apply. So, people paying a pretty hefty property bill, is that a conversation that you make sure people are cognizant of?

Clinton Wilkins 06:06
I say it all the time, especially when people are buying a new home, and I look at the property tax bill, and I’m like – Oh, you’re buying a home for $600,000 and the property taxes are $2,000 a year, enjoy it while it’s low. We know, that’s not going to be low forever. So there’s a couple of things that impact property taxes, obviously, one is the assessment and that is done in Nova Scotia by property valuation Services Corporation. The other thing that’s really impactful to the property taxes is the tax rate. We’ve talked about this before, many municipalities have been edging up that tax rate because the cost of operating these misspellings have gone up just like the cost of our food, and our fuel has gone up with inflation. A lot of people are paying a lot more property taxes now than they were even a couple years ago. The one thing I will mention, again, is those assessments. They were very, very low for a long time. They’re starting to come more up to where the market value is. But the assessments are still way below what people can sell for, and way below what we’re able to get an appraisal for. Some lenders will accept the assessment value as the market value, and oftentimes not even need to do an appraisal. We have our automatic property valuation systems. As we know, we’ve talked about this before, nobody really wants to get an appraisal of the property unless they’ve done a bunch of work and they’re curious, or, they need to draw a line in the sand for whatever reason. But some lenders will use that assessment value as the value, and then waive the appraisal requirement, which is awesome. I mean, it’s a good place to start. Typically, that’s one of the first things that we look at, when we have a client coming in to do a renewal or refinance. I’m like, “Okay, what’s your assessment value?” The appraisal is probably going to be more, but is that going to be enough value to make things work for you?

Todd Veinotte 07:49
There was a lot of concern, and they’re probably still there, concerned people who were renewing who had a really nice interest rate five years ago, and renewing now, are you dealing with a lot of clients in that situation?

Fixed vs variable rates

Clinton Wilkins 08:02
We are in the thick of things around renewals. I will say to you, still not as many purchases happening as people might think there are. But, a lot of people renewing and a lot of refinances and those ones that are renewing, oftentimes, we’re either extending their amortization, changing something, doing a home equity line of credit, a combo type product, we’re not just doing straight transfers often from lender to lender, we’re changing the type of product and we’re giving clients different advice right now. Let me tell you, the advice, it’s changing. I can tell you, there has been a huge, huge, huge uptick in clients taking a variable rate mortgage. Specifically, one of the banks and the “Big Five” has made the news here in the last couple of weeks, giving a very good rate on conventional mortgages, which include refinances with a 25 year amortization, they are giving rates at prime last 101 basis points. So, right now, that’s a variable rate at 6.19. While our listeners are listening right now, that’s still available, but they’re only running this promo until next week, Todd, it’s shifting the conversation to say, variable, it could make sense and it could make sense for a lot of people. The difference between that variable at like 6.19 and where we can get a fixed rate today on a refinance or conventional mortgage. The spread is not that far. The economists are still talking that June could be realistic when we see that the bank can’t do that first rate discount. I think people are on the fence whether it’s going to be a hold, whether it’s going to be a reduction in the key overnight rate, but I will still go out on my sore like I said, here a couple of months ago. I think by the end of 2025 we’re gonna see the key overnight rate down like 200 basis points.

Todd Veinotte 08:37
You’ve been a proponent of the variable rate for ever since I’ve been with you.

Clinton Wilkins 09:50
For us, probably about 60% of our clients are in a variable 40% are in fixed historically 60% are on fixed so I think more of our clients I’ve taken variable like over the years because they’re here with me, they are hearing us on the radio, they’re seeing us on Facebook, they’re getting SMS from us and emails from us and they’re more comfortable they’re more educated around the variable. The last 18 months, people have not done better than they have on the fixed. But, if we look at where things have been over the last several years, it has been less. Certainly during the pandemic people, their cost of boring was way, way below what it would have been as a fix. If we’re averaging it out, people are still doing good. I really think over the next, you know, 6, 12, 18 months, we’re gonna see the rate loss.