Home sales in Canada, while elevated by historical standards, are decelerating and mortgage underwriters are finally beginning to turn their attention to the backlog of refinances.
Although that’s the case, good mortgage brokers leverage strong relationships with their lending partners to get their clients’ files moved to the front of the line. Certified Mortgage Brokers Toronto, a brokerage that mainly works with chartered banks and alternative lenders, has been running a campaign of late emphasizing its above-average turnaround times, which is made possible by its intricate CRM. Since the brokerage has built its business on expeditious turnaround times, which is no small feat in the broker channel, it’s decided to exploit that strength at a time when refinances are taking weeks to fulfil.
To understand why the market has become so inhospitable for transactions as ostensibly simple as mortgage refinances, Shamil Shamilov, founder of dNOVO, a Toronto-based digital marketing company that has a sizeable roster of clients in the real estate and mortgage industries—and, therefore, has an insider’s perspective on the market—says that lenders simply have a dearth of staffing.
“Underwriters have been focusing on the deluge of purchase files that have fallen on their desks because funding a purchase is more of a priority than a refinance,” said Shamilov. “But what we’re seeing right now is, even though underwriters are finally getting to refinances, turnaround times are incredibly slow.”
Although refinances have taken a backseat to purchase files, the volume of those dossiers has risen inordinately. Mortgage broker Leon Turkin explains the reason is a combination of low-interest rates and massive home equity growth that’s a result of a frenetic sales pace over the last year or so.
“It’s a no-brainer for people to turn to refinances at this time because the Bank of Canada has already said it fully expects to increase its benchmark interest rate by 2022, so people are rushing to access cheap money in their homes, which have benefited from white-hot sales across most of the country,” said Turkin of the Turkin Mortgage Team.
Last week, the Bank of Canada decided to maintain its benchmark rate but the clock is ticking and Canadians are on notice. Consequently, real estate professionals—even some of the seemingly unlikeliest—have been left scrambling to keep up with demand for their services, and just like Certified Mortgage Brokers Toronto, some are building their businesses on how quickly they get things done.
“It isn’t just mortgage brokers and underwriters who are feeling the heat from all this extra demand,” said Mariya Berenbaum, owner of MB Property Law, real estate lawyer in North York.. “There’s been an increase in people trying to secure the services of real estate lawyers, especially because refinancing a mortgage isn’t always as easy as it sounds, but lawyers are backlogged right now. At M.B. Property Law, we’ve made it our mandate to answer every call and work those extra hours to help our clients refinance their mortgages at regular turnaround times. Word’s gotten out that we’re meeting regular turnaround times and our phones have been ringing non-stop.”