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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%.

Timestamped Show Notes

(click the timestamp to jump directly to that point in the episode.)

[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.


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