As I mentioned in my last blog, the purpose of my visit to Mexico last week  was to attend the TMG conference.  I was asked to take part on a lender panel, where I and a number of my esteemed lender colleagues,  would answer questions about our industry.  A question that was put forth to me was, “do I believe that regulators would make further changes to mortgage rules in 2013?”  My crystal ball was a little foggy that morning, it could have been the tequila, so I applied reasoning when answering.  I answered, “no “.  No one can say with absolute certainty what the government may or may not do.  But today’s reality leads me to believe that any further changes to mortgage rules may create unintended consequences, which could result in harming our economy even further.   My view is that of CAAMP’S, the most recent changes to mortgages rules may have over reached.  If the most recent changes to mortgage rules was intended to slow down home sales, then one would have to say mission accomplished.  Due to all the changes to mortgage rules over the last three years all of us are feeling an impact in some form or another.  This is the new norm, and time will tell if regulators went too far this time.  So, I’m less concerned about further changes to mortgage rules in the immediate future than I am about rhetoric.

There’s a good article in the Globe and Mail about what could possibly happen to the Canadian housing market when you cry wolf enough times.  Consumer psyche is a fragile thing.  If people in authority, and those supposedly in the know, say it often enough consumers will deem it to be so.  Good evidence of this came from the most recent Maritz survey on behalf of CAAMP.   Over sixty per cent of the general population believe Canadians have taken on too much debt.  Yet close to seventy per cent of the respondents do not believe it applies to them.  So how did they come to formulate this opinion?  Did they conduct a survey in their neighborhood?  Are they all qualified economists?  They form their opinion based on headlines,  and those that are responsible for fanning the flames.  It’s the rhetoric that I’m most concerned about now.  The mind is a powerful thing, and those in sales know how import their psyche is when it comes to success and failure.  Never would I suggest to ignore the facts as it relates to business.  That’s suicide.  Those of us in the industry can separate facts from hyperbole.  But does the consumer do the same?  Of course not.  They’ll form their opinion on sound bites and snippets of information.  Thus my concern about rhetoric, especially coming from those who have fallen in love with the sound of their own voice.

Here’s the link to the Globe and Mail article, it’s a good read. 

Until next time,

Cheers.

I feel like that old man slowly watching his friends die off; checking every day to see if his name has made into the obituary section, realizing it hasn’t he goes about his day.

In the short time that I’ve been blogging I’ve written a few farewell blogs to lenders who are no longer with us.  Ashes to ashes, dust to dust, we bid so long to ING in the broker channel.

Firstly, if the news that the ING brand will no longer be available in the broker channel, well, I’m surprised – anyone would be surprised.  Scotia Bank, who purchased ING Canada, is focused on franchising customers and their strategy is to enhance and grow their own brand.  So it was only a matter of time before orange would become totally red.  I guess the time is now.  The loss of any lender in our space is troublesome, on many levels. Competition has many benefits, pricing, product innovation, and credibility.  To think this announcement won’t create a dominos effect is a little naive.  Recently some lenders have announced a reduction in finder’s fee.  Why? Because they can.  That’s what happens when choices become limited.  Don’t believe me? Ask any broker in Australia.  I’m not suggesting there will be a mad rush by lenders to reduce compensation but with every announcement telling us another lender has exited the market the possibility increases.  It’s Darwin’s theory of business evolution.

For those who have supported ING you should take a moment to thank them for their support of your business.  They paid well, they had aggressive pricing, and from what I heard they made tremendous strides from a service standpoint.  If you were a supporter of ING you can’t complain, it was a good run.

Until next time

Cheers

It’s not necessarily what you say but when you say it.  This came to mind to when reading an article in the Globe and Mail this morning.  The headline read, “Jim Flaherty on home sales dive: I don’t mind prices coming down a bit, too”.  Was this remark simply off the cuff?  Or was it a comment made by someone who has decided it is time to pursue other career paths, therefore, being candid will have no political ramifications?  I got to thinking about that because the other half of the economic dynamic duo has already decided to bolt.  Mark Carney (not sure who’s Batman or Robin in this working relationship) has been making bold and provocative statements for the past 24 months.  Was that a result of Carney becoming enamored with his own press clippings or has he known for some time now that he would be perusing greener and more lucrative pastures?  Clearly there’s only one person who can answer that but it does leave one wondering if the level of candidness was a result of an impending departure.

So what to make of Flaherty’s statement that he wouldn’t mind if home prices come down a bit?  Now there’s a future campaign slogan.  Out on the campaign trail, pumping flesh, kissing babies and reminding voters that’s okay if the equity in your home has been eroded.  Logic and experience tells us that politicians have an outside and inside voice.  Outside voice: “NO NEW TAXES”.  Inside voice: “VOTE FOR ME MY LITTLE LEMMINGS”.  Flaherty is not a nephrite when it comes to making public comments.  He’s been doing this for too long to know what will and will not stick to him.  Politically, making a comment like “I don’t mind prices coming down” doesn’t make a lot a sense; so, is this frankness a sign that he may be moving on?  If it is, who could blame him?  He’s done an admirable job during uncertain times.  He’s been in this role for some time now, and navigating the Canadian economy since the economic crisis couldn’t have been a lot of fun.  The daily pressure and issues he faces would leave most curdled up in the fetal position, sucking their thumbs and calling for their mommies.  Okay, maybe that’s just me.  Jim Flaherty has done a great service for this country, and if he’s decided that now is the time for him to cash it in, we should all volunteer to give him a ride to the bank.

As for the most recent housing data in the Globe article, “Alex, I’ll take No #%&@ for $200, please”.  The net result is exactly what the government wanted.  The good news – the number of listings are down.  There’s balance between supply and demand, and we have low interest rates and solid employment numbers.  There’s a new norm we will all have to adapt too, and nothing suggests Armageddon is on the way.  Now if we could only get public officials to lower the decibel levels, a bit, we’ll be just fine, thank you.

Until next time,

Cheers.

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For some time now, finding positive news about the mortgage industry and the real estate market in general required a Sherpa Guide and a donkey.  “I think I just heard something positive about mortgages…  OOPS, my bad, it’s just Big Foot.”

It hasn’t been easy but over the past couple of weeks there’s been news which leads me to believe the Four Horsemen of the Apocalypse may not be on the way.

CAAMP’s Annual State of the Residential Mortgage Market in Canada (love those short titles) was released just prior to Mortgage Forum 2012 in Vancouver.  It’s a must read for everyone in the industry.  All the major media outlets have picked up the report and there’s been a significant amount of coverage based on the report.  One aspect of the report that bodes well for the industry, and should give regulators some degree of comfort, is how responsible Canadian borrowers are.  I found it striking that 32% of borrowers either increased their monthly payments or made principal reductions over the past 12 months.  It is estimated that $3.5 billion in additional monthly payments were made, and a further $20 billion in lump sum payments.  Yes, consumers are taking on more debt but they’re looking at paying off their debt sooner.  When stories are written about consumer debt levels, a word or two should be dedicated to how responsible Canadians are in attempting to eliminate their debt.

Here’s another indication that consumers maybe be smarter than the press give them credit for.  Over the past 12 months there’s been a high level of ARM conversions to 5 year fixed terms, and the product of choice today is 5 year fixed. Maybe, just maybe consumers are smart enough to know that now is not the time to gamble.  They’re looking at five year terms and saying the rate is competitive and it’s worth the peace of mind for the next five years.

As far as I’m concerned, the only stat that matters to our industry is the unemployment rate.  Everything else, where prime is going etc., is secondary.  Our industry, our entire economy will rise and fall with employment numbers.  It’s simple, if borrowers are working and they have access to cheap money, like they do now and will have for the next few years, there’s less reason to dump a property.  A home owner may not get the price they’re looking for but because the home is affordable there is less reason to discount the price.

If a home owner loses their job a completely different set of circumstances arise.  That’s why there’s reason for optimism over the most recent employment numbers.  According to Stat’s Canada, 59 thousand new jobs were created in November. On a year over year basis 294 thousand new jobs have been created, and hours worked have also increased.  These numbers are critical, not only to our industry but to our economy. Anytime we see a reduction in the employment rate it’s a reason for a high five or fist bump.  So turn around and give your work mate a fist bump because our unemployment rate has been reduced to 7.2%.

There’s more good news that will be readily available when the full Maritz survey becomes public in January, another must read.  But even if we only take into account the data available today there’s reason for optimism, and lessons to be learned.  For instance, consumers do not require regulators to legislate responsibility. Consumers are miles ahead on that one.

Until next time,

Cheers.

Customer Complaints play a critical role in any organization because they are the rawest form of interaction between a customer and a business.  Complaints, by their very nature, are an emotional reaction to an experience.  It’s visceral so it’s more about emotion than fact.  Customers who are angry, frustrated or “feel” like they have been disrespected in some fashion are more inclined to let their feelings be known.  A company should never, ever, dismiss a customer’s complaint, even if it’s proven that the complaint has no factual foundation.  An angry customer today has a multitude of communication platforms at their disposal to share their outrage.  A company who ignores customer complaints does so at their own peril.  Companies can learn a great deal from complaints and in some cases customer complaints can help an organization identify flaws in their DNA.

As the Chair of the CAAMP Mortgage Forum, I think about customer complaints and feedback, and how best to interpret the complaints/feedback.  Unlike organizations that produce a product, the Mortgage Forum is an experience.  An experience is emotional and therefore when I review the CAAMP survey I do so through a filter.  All the feedback we receive about the conference is carefully analyzed but I also remind myself that it is nearly impossible to satisfy everyone. Some people are predisposed to having a less than positive experience.

For example, some complaints are made by those who fall into the “bitter bucket”.  These are individuals who really dislike a different approach. Let me rephrase that, they hate everything.  They long for the old ways.  The simple things in life provide them comfort, and they miss that.  If the messiah himself was to appear on stage these people would say, “great…just what we need…another motivational speaker”.  The other group is the “phantom bucket”.  These are the people who go to the conference and don’t attend any sessions. However, they still share their opinions about the quality of the sessions and speakers.  I’m impressed that their telepathic prowess is not impacted by sleep deprivation and libation intake.

Irrespective of the categories of complaints they all serve a purpose.  The Mortgage Forum is a two and half day experience and the likelihood of being completely satisfied over the course of the entire conference is pretty low. The attention to detail, by those responsible for putting this event together, is the reason why the majority of delegates are satisfied with their experience at the Mortgage Forum. For the people who arrange the Mortgage Forum, it’s the little things.  Like addressing the complaint we received one year that “the bagel’s we served at breakfast were too small”.  So now when you have breakfast at the Mortgage Forum you’ll notice there are bagel instructions on the back of all the napkins: “If you believe the bagels are too small, please feel free to eat two of them“.  Just kidding, we went with bigger bagels.

Until next time,

Cheers.