4 October 2019

“It makes sense. We know what we focus our attention on, e.g. The Kardashians,” – he says. “The main problem is that it’s very easy for the government to regulate the industry in a way that clients will blame only banks and not the appropriate parties. This scheme is very disturbing”.

In addition to it, only 4 out of 10 Canadians know they don’t have to pay for mortgage insurance in case they provide at least 20% down payment.

As the cost of insurance varies from 4% to 5.85% of the mortgage value, it’s a lot of money spent on something which is not obligatory.

Are there ways to fix this? Of course, it will not be easy, but Woodhouse says a good start is making mortgages more real for borrowers.

“The main issue is making mortgages interesting and relevant to clients not only when they need them”, – he noted. “We’re talking about not only mortgages, but about real estate as well”.

Paul Taylor, President and CEO of Mortgage Professionals Canada, shares this opinion.

“If you don’t work in a mortgage industry, then you probably talk about mortgages only once in five years”, – he says. “I believe that many borrowers do understand their payment obligations and its schedule when they sign the contract. However, later all the information they receive is viewed as something not relevant to them”.

Now, we can see a growing tendency for DIY online mortgage shopping, so maybe uninformed borrowers need professional guidance from brokers.

In Woodhouse’s opinion, they do, and even more than ever.

According to Taylor, the results point to a strong need for professional and impartial advice at the moment of purchase, renewal and refinance. “Although some buyers believe they will do better off without counsel, I consider it inadvisable in most situations.”

He looks at the UK as an example. After a 2008 crisis, the country took certain measures by 2014. They included a ban for self-declaring income, and mandatory advice on mortgage products for borrowers.

“I expect the last point to start attracting international attention in case online sales begin to grow too fast”, – Taylor noted. “With the current loans sizes, the personal liability and the potential interest-cost difference for only 0.25%, there should be some scrutiny on consumer outcomes for self-serve variants.”