29 Dec

YOU CAN’T EAT YOUR EQUITY

General

Posted by: Tracy Price

Jill from Fergus called after being referred by a good friend who had a pleasant experience dealing with us. “if anyone can help you, these guys can,” she told Jill. Jill is a single grandmother who worked in a local factory until one day she could not lift her arms. Long story short, she was put on Workmen’s Compensation at her current wage at the factory and offered retraining. The training program ‘was a joke’ in her words. Jill was retrained as an office worker and most of her duties  involved typing which, of course, she could not do with her bad arms. So she was trained on a program which enabled her to voice activate the keyboard. When she finished the training she tried in vain to find a job. “No companies have this type of technology,” Jill said. So when she couldn’t find a job in that field, Workmen’s Compensation cut her wages from $700 per week to $300 per week. That’s when Jill spiralled downward into a depression. She didn’t know where to turn. She quickly depleted all her resources and was living from hand to mouth while raising her granddaughter.

Well thank goodness Jill called us. She had lots of equity in her home but it was doing her absolutely no good when it came to meeting everyday expenses. After all, you can’t eat Equity! We went right to work to find her a lender who would approve her for a mortgage at 65% of the value of her $220,000 home. She had maintained good credit and we were able to pay off her current mortgage of $65,000, her line of credit of $20,000 and the new mortgage we arranged for her at $150,000 gives her $50,000 to live on until she can work again or she can invest the money to earn extra income. It will also give her funds to hire a lawyer to help her fight Workmen’s Compensation. You see Jill really wants to work and she is too young to retire. She just needed us to give her a little “kick in the butt” to get her chutzpah back. Now that she has some money she will take on Workmen’s Compensation. Her mortgage rate has gone down a half a per cent to 2.3 per cent and even with all the new money her mortgage payment is only $550 per month.

When we first met Jill she was pretty much beaten down by her circumstances. Now she is stronger and ready to fight. Jill, just needed someone to listen, to care and help her get control of her life again. And she doesn’t want to sit at home. She really wants to work at a job she can do! Doesn’t that kind of person deserve our help? A resounding ‘YES’ from the Price Team!

By the way, if you tossed out the paper by mistake and would like a previous article…We are blogging now. You can see our past articles on www.ronandtracy.ca or www.tracyluciani.ca.

 

16 Dec

‘RED ALERT FOR DEBT STRAPPED CANADIANS

General

Posted by: Tracy Price

Mark Carney, governor of the Bank of Canada this week issued a broad warning that the economic crisis is far from over, that consumers need to ‘rein in’ their appetite for cheap money. Carney said that household debt is too high(increased 7% in 2010 vs. a 3.5% decline in the U.S.) and that ‘inevitably’ there will be a ‘Day of Reckoning’.

This rather pminous warning along with the suggestion of the need for higher cost money, leaves us not only a little bit ‘miffed’ but quite frankly, ‘suspicious’ of Carney’s motives as well. Firstly, the Bank of Canada sets the prime rate based on ‘inflation’, which continues to remain very low. Secondly, the B of C is handcuffed in that if they increase rates, the loonie will very likely soar, hurting an already weak export market further, thereby increasing unemployment etc., further weakening the Canadian economy which he has made it clear is struggling more than expected. Thirdly, the U.S. federal reserve interest rate policy is for no increases in prime, until at least 2012. Fourthly, the U.S. economy remains extremely weak, and is expected to take several years before it truly recovers. Unemployment there is now considered ‘structural’ meaning that unemployment will continue high even after the economic recovery occurs, perhaps stay high permanently. Many see any real U.S. recovery as being years away, perhaps 4 to 5 years away, and since Canada is inextricably tied to the health of the U.S. economy, growth here should remain sluggish for years to come. These are the primary reasons that prevent Carney from increasing the prime rate, although he would clearly ‘like’ to.

We find it ‘suspicious’ of him to make such statements on the one hand, while on the other he is now ‘encouraging’ our banks to “tighten lending requirements, even in a low inflation environment, to discourage risky behaviour” Funny how the government wants us to to spend to sustain tax revenues which we now have the dubious distinction of being the ‘highest in the world’, while at the same time wants us to reduce spending without incurring debt when most Canadians cannot save because of excessive taxation, and excessively high credit card interest rates. The big banks profits continue to boggle the mind, yet Carney is now asking them to charge more on loans to curb lending and spending which in turn will make them more profits. We have to wonder if the banks have him on their payroll.

3 Dec

MORTGAGE BROKERS CREATE ‘INVALUABLE’ COMPETITION WITH THE BANKS

General

Posted by: Tracy Price

Recent statistics show that Canadians are choosing mortgage brokers instead of the banks, much more often these days, and that is a good thing for the consumer. Read on, and find out ‘Why’

Our overall industry market share in 2000 was 17%, in 2008 it was 25%. Today it has grown to 38% representing approximately 4 of every 10 mortgages, with 44% of First Time Buyers opting to choose a mortgage broker first. It is predicted that our industry will have a 50%+ market share versus the powerful Canadian banks in the next 5 years or so.

This trend is the result of the consumer recognizing the value of the mortgage services of a mortgage broker, particularly giving them much greater choice of mortgage products and generally lower rates than the banks. The internet has also become a big factor as well in our growth, in that more and more people research the internet first before deciding on the source of mortgage financing, and with some 20,000 independent mortgage consultants offering their services across the country. So the choice of choosing a mortgage consultant versus one of the big 5 banks, is huge.

Why should you support our industry and choose a mortgage broker as opposed to your bank? Well, frankly, we could write a book on this subject, suffice to say that, if our industry were to be decimated as it was in Australia with the credit crunch in the past two or so years, mortgage brokers all but disappeared and ‘guess what’, the 4 big Australiaqn banks jacked up interest rates, and profits soared because they no longer had any competition from ‘non bank’ lenders who the consumer could only access via mortgage brokers. All the banks hiked their rates, believe it or not, ‘simultaneously’, claiming at the same time, that there was no ‘monopoly-like’ power. Could/would such few banks ever act together for their own benefit in this country? Well, Yes. We weren’t borne ‘yesterday’ were we?

So the moral of this story, dear readers, is that, because of our industry. there is considerable competition in the mortgage marketplace. And this is healthy very healthy. Without us there would not be any ‘non bank lenders’ for us to send your business to, to get you a better ‘deal’ and financial ‘solution’. Our ‘beloved’ banks would have a virtual monopoly. Hence our ‘great’ Canadian banks would have a ‘hey dey’ and their profits(which are already insane) would soar to the heavens without a doubt.

Case in point: Check out this rate comparison.

 

 

Bank Rates                                                                                     Our Rates

                                                                                                    

1 Year Open                        6.70%                                                   6.49%

6 Mths Closed                      4.45%                                                   3.95%

1 Year Closed                       3.35%                                                  2.44%

2 Year Closed                       3.60                                                     2.89%

3 Year Closed                       4.25%                                                  2.90%

4 Year Closed                       5.19                                                     3.54%

5 Year Closed                       5.44                                                     3.49% WOW

7 Year Closed                       6.09                                                     4.75% WOW

10 Year Closed                     6.40                                                      5.15% WOW

5 Year Variable                     2.75%                                                   2.30%  WOW