On October 14, 2021, Mortgage Professionals Canada hosted its national conference featuring presentations by several industry leaders. During the Lenders’ Panel, First National’s President and Chief Operating Officer Jason Ellis provided his thoughts on the mortgage market, planned government policy changes to improve affordability, and lessons learned during the pandemic. Here are some of Jason’s comments.
Despite the unpredictable nature of the pandemic, First National experienced record mortgage volumes thanks to the support of Canada’s mortgage brokers. Our intention is to finish 2021 in a strong fashion, build on this momentum in 2022 and work tirelessly to provide broker service.
First National expanded Excalibur’s markets in the past 18 months but generally chose to focus on execution rather than new product introductions. This was intentional and allowed the company to bring its full attention to originating, underwriting and servicing mortgages.
First National recruited a record number of new team members throughout the pandemic. This expansion helps the company meet the demands of growth. Going forward, the emphasis will be on immersing our newest team members in First National’s service-oriented culture.
Once COVID-19 is no longer a threat, First National will adopt a “digital by design” work environment. This will enable the workforce to engage in remote work where possible and/or practical and use the lessons of the past 18 months to deliver First National standards of broker service.
One of the lessons First National learned through the pandemic is the importance of communicating effectively and often. Sharing information with brokers and setting service turnaround time expectations, particularly during periods of acute demand pressure, are fundamental to maintaining great relationships.
There has been a notable increase in mortgage prepayments since the pandemic began as single-family borrowers refinance to take advantage of low mortgage rates. First National’s mortgages under administration have definitely grown in any event, but perhaps not as much one would expect based on record origination volumes.
The recent uptick in bond yields has been a welcome event for NHA-MBS issuers including First National. There was a period of time when the indemnities paid to MBS investors exceeded the penalties payable by borrowers.
A plan by the newly elected federal government to extend mortgage default insurance eligibility to homes worth $1.25 million – from the current level of $1 million – is critically important. Doing so will allow more Canadians to access insurance and reintroduce critical regions of the country into the default insurer’s book thereby diversifying risk for Canadian taxpayers.
Allowing longer mortgage amortizations would be a simple and effective policy tool to use in the quest to make home ownership more accessible. Since longer amortizations make it easier for borrowers to cover their monthly mortgage payments, First National is supportive of the idea. Another policy change – shared equity – has not resonated with Canadians so far and probably won’t. It remains to be seen how effective a proposed ban on blind bidding would be in quelling price increases.
It will be necessary for governments to find a way to make ownership for first-time buyers accessible without further stoking home prices. This will be a difficult balancing act.
It’s important for all governments to coordinate their approach to housing supply and affordability. Municipalities have to be sensitive to community concerns about housing intensification, but a not-in-my backyard approach presents a threat to broader public policy goals set by senior levels of government.
In today’s frothy market, buyers need to be aware that the appraisal value of the home they are bidding on may be below the price they end up paying. In these situations, borrowers will need a financing back-up plan.
Home buyers should be encouraged to undertake home inspections before buying. Often, in a race to outbid others, home buyers (especially first-time home buyers) overlook this form of due diligence and encounter unexpected problems.
Everyone at First National is committed to delivering the best service possible so we can help our broker partners provide the best service to their customers. We sincerely hope we have been able to live up to this pledge throughout the pandemic and we intend to work hard to deliver for the broker community in 2022.