An uncertain, fluctuating Canadian real estate market can be absolute nightmare conditions for an agent or mortgage broker to work in. Your efficiency, closure rates, and overall success will be more dependent on your underwriting than ever. Let’s look at considerations and contingencies.
First – lenders can get finicky when house prices begin to fluctuate and begin taking extra measures, such as asking for appraisals when they normally wouldn’t, tightening mortgage underwriting practices as it relates to clients, properties, property types and areas, and lending more conservatively.
What can you do? Expand lender relationships with lenders that are competitive to your current lender base. You want to do this before a lender you rely on flops out.
Second – mortgage underwriting. When the real estate market is fluctuating, it can be hard for the homeowner and you to really know what their property is worth. When you are working deals that blow up on appraisal, your time is wasted as is your clients’ time and the lenders’. The client is coming to you for help because they want a professional to organize their mortgage. They are relying on you to quote and put together a deal that will actually happen.
What can you do? Look at a tool to independently validate your applicant’s property values, preferably the same tool that your lenders use, such as AVMs – this will save you valuable time. This will also help you overcome the first point discussed.
Third – opportunities. While you may have been that much more thorough when underwriting your deals, uncertainty creates opportunity because people react to what they hear in the media. The housing market for the past couple of years has been a favorite topic for newscasters. Interest rates increasing and the Canadian real estate market cooling – in other words, the sky is falling — has been a big news story.
This is a perfect time to throw budget into marketing your refinancing business. In this environment, it’s also the ideal time for people to use home equity to consolidate debt and reduce monthly payments in preparation for mortgage renewals at higher interest rates.
Mortgage underwriting in an uncertain Canadian real estate market doesn’t have to be nightmare. With the right resources, you can help your clients stay in or purchase their dream home.
Purview for Mortgage Brokers has the tools to help you take on the fluctuating market.
Contact us today at 1.855.787.8439 or visit www.purviewforbrokers.ca.