Ron Butler on Predictions in the Mortgage Market

Today we are joined by Ron Butler, Founder of Butler Mortgages. Ron is here to discuss why the market is currently experiencing such a surge, the trickle-down effect of the government COVID relief measures, and why B business is down by 60%.

[2:15] How are things going in your business?

Ontario is very busy. We are licensed in 3 provinces.
In Alberta there’s obviously challenges in property valuations because of what the Federal Government has done.
I have a lot of sympathy for what’s happening there right now.

[3:10] Do you think the Ontario market will slow anytime soon?

There’s pent up demand. Sales were down 75% in April and 45% in May.
Coming out of lockdown, people with small square footage are looking to move somewhere larger in case they get locked down again.
There are also the lowest rates ever right now. It all combines to incentivise sales.

[5:50] What’s the condo market looking like right now?

The last 6 months have been an amazing economic experiment with payment suspensions.
The results are no panic in the streets about the economy.
The last 3 months have seen a complete unravelling of the B market. Refinancing is 70% of B business. If you don’t have to refinance, why would you?

[7:26] You’re saying we aren’t feeling the economy down-turn because of these deferral programs?

Some people are looking at long-term unemployment and uncertainty.
There are some that are better off than this time last year due to all the government assistance programs. This is a completely different experience of an economic downturn than any other in history.

[10:04] What do you think about the CMHC Chief’s position on the debt cliff? Do you think it’s a real thing?

People in our industry love to go off on Evan Siddall because he says things they don’t like.
His point of view is that property prices in some locations are ridiculous and it’s dangerous to let people put 7.5% down on a $900,000 property.
It’s concern for people and what may happen next year.
The current deficit is $343 billion and it isn’t sustainable.
These programs are good but could have been implemented better.

[13:29] What do you think about the tightening of regulations on October 1st?

It isn’t a tightening, it’s a return to normal. The deferral period is over.
Programs for those really in need still exist but wide-open deferrals aren’t sustainable.

[14:45] What do you think the real estate market is going to look like next year?

We don’t know if there will be a vaccine by March next year and everything hinges on that.

[16:16] Would you buy right now?

Absolutely not.

[16:24] Are you doing transactions with people that are putting down 7.5% on $900,000 properties?

All of us in real estate are doing those transactions. It’s our job.
It’s not our place to say if it’s a good idea or not. We can’t make those decisions for people.

[17:54] Any comments on the remarks made by Evan Siddall that lenders, banks, and other insurers should align with the CMHC?

If he believes in his position, then he should believe it for every insurer.
Remember that we are biased to our own interests.

[19:30] Do you think insurers here could adopt a surcharge like they have in the US?

If you’re charging more but not changing the underwriting, that’s only a benefit.
We have to realize how lucky we are compared to other countries. Britain has changed its mortgage approach 5 times since COVID hit.

[21:00] Do you see B business being affected by this, and how much of your business is B?

It’s a small portion overall.
If you can defer everything, why would you refinance?

[22:15] How do you answer the question ‘what’s your best rate’?

My best rate is 158 high ratio, nobody else has that rate and you can all go screw yourselves! That’s my answer.

[22:53] If you were getting a mortgage today, would you go fixed or variable?

You have to consider penalties and if you are planning on staying in the property for 5 years.
I’m 63 and 360lbs. I don’t even buy green bananas so I’d go variable.

[25:15] How do people find you?

We advertise everywhere and we advertise rates aggressively.

[26:39] If you could change 1 thing in the mortgage business, what would it be?

I would ban awards.

[27:50] When rental deferrals come off in Q1 2021, do you see forced selling of rentals?

Condos are the most vulnerable commodities today. We’ll have to watch.

[28:22] Do you think any of the big banks would rejoin or join the broker channel?

This is a topic there should be seminars and discussions on.

[31:00] Why do you think the Australian model hasn’t taken off here?

If you are a AAA buyer, why would you pay to have someone tell you what to do or to get a loan?
In 25 years, there won’t be brokers for A business.

[33:30] What does your org chart look like?

Like spaghetti!
We should do better at process handling, but we are very deal first.

 

Contact Ron here: https://www.butlermortgage.ca

If you’re interested in becoming a deal creator, visit https://www.10loansamonth.com/call/ to find out more.