ING will move this month to register all new mortgages as collateral charge, following on the heels of TD and some other lenders.
The change is set to take effect on Dec. 10, 2011, with the bank to make a formal announcement to the broker channel later this week.
The switch comes as the bank begins preparing for the launch of its HELOC early next year. That product effectively answers mortgage broker calls for their lenders to offer more of those types of offerings as a way of better servicing their investor clients and others.
Earlier this year, a report revealed the extent to which HELOCs are already being used by Canadians, for a total of $215 billion.
“As far as we know this is the first time anyone has tracked that end of the mortgage market,” said CAAMP Chief Economist Will Dunning. “This is the first snapshot we have of the HELOC proportion of the industry, so we’re uncertain how quickly it may grow, although I think it will.”
Of an approximate 9.45 million homeowners in Canada, an estimated 1.87 million hold both a mortgage and a HELOC. About 770,000 have a HELOC, but no mortgage, with the majority of Canadians holding just the mortgage itself. Approximately 3 million lucky Canadians have no debt at all on their homes.
HELOC are increasingly being used by small real estate investors to help finance second or third properties, often with a renovation focus and the idea of a quick capital gain.
Mortgage brokers have generally found it more difficutl to offer their investor clients that product, simply because of the dearth of HELOCs available to them.
While mortgage brokers continue to attract as much as 30 per cent of the first mortgage business and 20 per cent of renewals, refinances and transfers, their participation in HELOCs is relatively marginal. That has to change, said one Alberta mortgage professional, his brokerage one of the few actively courting that business.
“The difficulty for brokers is, flat out, a lack of available product,” Gord McCallum. “There aren’t enough lenders offering it, and many of the lenders that do use a double standard in that they offer HELOCs through their branches and their mobile mortgage specialists, but not through brokers. We haven’t been able to get a clear answer from them as to why that is, but it’s something that really rubs brokers the wrong way.”
