Broker Channel loses ING Direct

When Scotia Bank purchased the Canadian arm of ING Direct last September with a closing Dec 31, we knew that the writing was on the wall, only question was to what degree. Obviously, there is a duplication of services, and direct competition between what would now become one lenders services. ING for the last year has been one of our lowest rate lenders cutting .10 BPS off their web site rates to broker channel business, which has therefore undercut Scotia bank rates(and many other banks for that matter). We at least expected that to end with the Scotia purchase.

ING's letter to brokers stated that it's hope was that the broker channel will now funnel that ING business through to Scotia. Well the reality is that if Scotia doesn't become more aggressive with rates that will never happen.

In early 2011, ING began registering all of their mortgages as collateral, similar as to what T.D. Bank did in 2011. Brokers see and the public should see, that as a negative change, being sold to the public as easier future lending, when in fact in my eyes it is all about customer retention. Making it harder(more expensive) to the client when they try and leave when the mortgage is up for maturity.

Since the announcement of ING departing, the reality is that the other lenders in the broker channel are all lining up to get their piece of the ING business, so Scotia will likely see very little of the past ING business, unless as mentioned, they become very aggressive in rates. That being said, the reality is that Scotia may not care. ING is a no fee bank, and Scotia may be saying that the profit structure in paying brokers and aggressive rates is not cost effective, thus the decision to leave the broker channel.

Yes, we will miss ING, and in time the name may also be swallowed up by Scotia, and the public could lose a good no fee bank. Only time will tell to what degree that happens. But the bottom line is we all lose in this acquisition.

Dan :)

"Serial Movers", may be me, but so what!

I just read an interesting article that I don't necessarily agree with, but may be true for some. The article is on "serial movers" of which some who know me, may say I am. I likely have not owned a home for more than 5 years(and I have owned a few), and though I understand the costs involved in buying and selling, look at my residence as my nest egg. Yes I always love where I live, that is why I buy the house in the first place, but to me, I always look at it as an investment. If I don't think it has the attributes to appreciate over time, I wouldn't buy it, regardless if I love the house or not. Many people buy with emotion, not that there is anything wrong with that, but to me it has to first and foremost have the potential to make money. Anyhow, the article is worth the read. See here,

The article has its merits, and I don't think anyone should consider buying or selling a home without careful thought. It is and likely always will be our biggest purchase.

Borrowing against your home?

A common question asked, are my thoughts on HELOC’s, or Home Equity Lines of Credit. This is not a new source of borrowing, but certainly one that has become more common today due to large increases in our residential property values. Who wouldn’t want to borrow money at 4% today, when they could pay off credit card debt sitting at 18% or more?

The basic problem starts with our desire to have the material things in life today rather than saving up for them, and purchasing in the future. Most of us, including myself are guilty of this. I see clients regularly with thousands of dollars in credit card debt, and with fixed incomes, a daunting task to pay them off. There’s a reason the government legislated the credit card companies to start disclosing the actual time it would take to pay a balance to zero. A wake up call to all of us, that there’s a heavy cost in satisfying our have it now mentality.

So now the HELOC becomes a very interesting option, to either consolidate debts, or get an inexpensive, unrestrictive source of funds to do with what you like. The thing that people forget though, is that the reason the banks offer you the lower rates, is that they are secured with a mortgage( yes you read that correctly- a HELOC is a mortgage against you’re home) that almost guarantees them that they will get their money back at some point in time, whether you like it or not. It‘s amazing how often people say to me with pride, that they paid their mortgage off, and yet they have a large mortgage which is their HELOC.

I ONLY recommend getting a HELOC for a specific need such as a renovation that you know will add value to the property, or for an emergency. It‘s just another way for the bank to make it easy to pull out your hard earned equity, and spend it without much thought. There was a time society thought of their home as an investment that would hopefully appreciate, with their mortgage being paid down over time. When retirement comes, you would be living in a home free and clear of debt, therefore no mortgage payments, and a more financially secure future. More and more I am seeing those nest eggs being eroded, with the money being used for purposes they should never have been used for, such as expensive holidays, purchasing cars, and paying off frivolous credit card debt that should never have been spent in the first place.

If you must have a line of credit, get it separate from your 1st mortgage(as a second mortgage) and then it leaves you options when your 1st comes up for renewal. Remember that lines of credit have a floating rate and therefore are exposed to fluctuating rates in the future. Today we are at a point of historical low mortgage rates, and it is only a matter of time before they begin to rise. And when they do, it will be anyone’s guess to how quickly. Now is the time to be paying down useless consumer debt, not getting into more of it. On the other hand, low rates make for a great time to be purchasing long term appreciable assets such as real estate, or things you need such as a vehicle, I just don’t believe in using the equity in your home as a source of easy money to satisfy that have it now mentality.

I still answer mortgage questions here........

I know it's 'old-school' but I still answer mortgage related questions on this 'forum' - until I get  all of the people who are looking for mortgage and finance related answers to use my new platforms I'll be continuing to be active on the FORUM.

Just click the link and ask your question or reply to one of my Tweets to ask a question or use my Facebook page (links on the right).

Dan

Inaugural blog-post on my new blog!

I am the senior mortgage broker with Ottawa-Carleton Mortgage. With 25 years serving the Ottawa real estate market, I know the importance of ensuring my clients are informed and understand the process of closing a succesful mortgage transaction. As a broker, I deal with dozens of financial institutions, including the "Big Banks" and many life and trust companies. It is with this varied source of funds I am able to offer competitive rates and products to fill many individual needs.

You get more information at my website - www.mortgagemoney.ca

This blog will generally be complimentary to my website, twitter and my Facebook page and will allow me to provide weekly updates and my view of the market.