MAYOR:

Wall project joins condo turbulence

STUART HUNTER
Province

The Wall Centre False Creek condo complex next to the 2010 athletes’ village may be delayed by market conditions.

The future of another False Creek condominium project is in limbo.

Work on Wall Financial Corp.’s four-tower Wall Centre False Creek will likely be delayed.

The 414-unit complex is across the street from Vancouver’s embattled Olympic Village, a project of Millennium Developments.

President Bruno Wall said a decision on the future of Wall Centre False Creek is expected within 60 days.

Under the provincial Real Estate Development Marketing Act, developers can presell units for nine months without a building permit or financing, as long as disclosure statements are filed.

After nine months, developers must have a building permit and financing in order — or give buyers the option of taking back their money.

Disclosure statements were filed last April by Wall Financial for two phases of the development, meaning its nine-month sales period concludes at the end of this month.
If they fail to meet the deadline, developers must stop marketing the project and come up with a new plan within three months.

Media reports from last year show about 60 per cent of the first twotower phase were sold for between $400,000 and $1.3 million.

There were to be four towers in all. Two of the towers were designed to soar 15-storeys, one is 14 storeys high, and the fourth is 12 storeys tall.

The development would include a new performance, rehearsal, office and support space for the Playhouse Theatre Company.

Wall Centre False Creek is on the south side of 1st Avenue, between Columbia and Manitoba streets, directly south of the Olympic Village, for which the city is seeking nearly a half-billion-dollar emergency loan.

Yesterday, the provincial government granted Vancouver the right to borrow whatever it takes to complete the Olympic Village.

Changes to B.C. Building Code raising hackles of industry-watchers

Frank Luba
Province

Raising the roof on residential wood-frame buildings in B.C. from four to six storeys is raising the ire of some industry watchers.

With the forestry sector struggling, finding more uses for wood is important, and Premier Gordon Campbell said in May that he would support taller wood-framed buildings.

Housing Minister Rich Coleman announced changes to the building code in September to allow wood-frame buildings of up to six storeys. The changes take effect April 6.

The Consumer Advocacy and Support for Homeowners [CASH] Society is concerned about the change, particularly considering the ongoing leaky-condo situation.

A report prepared for the government earlier this year indicated there are more leaky condos than previously estimated. Still awaiting repairs are at least 45 per cent and possibly as many as 68 per cent of the leaky buildings constructed between 1982 and 1999.

CASH Society president John Grasty doesn’t understand why the government wants to push ahead with the new, taller buildings when the problems of older buildings haven’t been solved.

While the National Building Code limits wood-frame residential buildings to three storeys, provinces can adopt their own standards; B.C. has already pushed the limit to four.

The government used the argument that buildings with more storeys are built elsewhere.

“For them to say it works here and works there is irresponsible,” said Grasty. “It’s a little too convenient for them to rely on information from somewhere else.”

Grasty said higher wood-frame buildings might be even more prone to the ‘shrinkage’ problem, where walls and ceilings crack as the construction materials dry and settle.

That problem is currently not covered by the 2-5-10 Home Warranty Insurance program.

“The shrinkage thing is a major issue,” said Grasty.

He’s not the only one concerned.

Pieter den Uyl is the manager of building permits for the municipality of Abbotsford. He’s already aware of builders interested in going to six storeys, which is an economical way of increasing density in multifamily residential construction.

“I think the heat is on lots of communities like ours,” said den Uyl of builders’ interest.

He said the change in code from three storeys to four storeys took about 10 years.

“From my perspective, it’s a really rapid move,” said den Uyl of the jump to six storeys.

Den Uyl participated in some of the discussions prior to the adoption of the newer heights and he’s concerned the fire-safety requirements in the new six-storey code aren’t as stringent as was previously suggested.

Coleman was out of the province and unavailable for comment.

© Copyright (c) The Province

Documents show they expected to recover $100 million, thought dismissal of developer would put Olympic village schedule at risk

Jeff Lee
Sun

The Olympic village developer ‘exceeded expectations’ in its transformation of the southeast False Creek property, city hall managers reported. Photograph by: Ward Perrin, Vancouver Sun

Senior Vancouver city managers never wavered from their belief that Millennium Development should remain as developer of the Olympic Village even as global markets tumbled and the financial risk to city taxpayers grew.

They even argued in confidential documents that removing Millennium would inject greater risk to taxpayers and compromise already tight construction deadlines on the $1 billion real estate project.

Most importantly, they said the project remained financially viable and that the city could recoup with interest the $100 million they were proposing be given to Millennium until its commercial lender, Fortress Credit Corp., resumed loan payments.

Staff also praised Millennium, saying it had “exceeded expectations” and had performed well even though escalating construction costs and the subsequent worldwide credit crunch had hurt its financial deal with Fortress.

The Vancouver Sun reported Thursday that it was given copies of in-camera city council briefings outlining troubles with the False Creek South development. The first was a June 26, 2007 meeting in which the elected politicians were told the city’s decision to withhold ownership of the 17-acre parcel until after the 2010 Winter Games had vastly complicated Millennium’s ability to get construction financing.

The report, written by finance director Ken Bayne and Olympic Village development manager Ian Smith, recommended the city give Fortress a “completion guarantee” as well as access of up to $200 million if a $683-million loan to Millennium went bad. Council agreed, in part assuaged because the real estate market was strong and Millennium’s owners had offered substantial personal and corporate guarantees.

But by October 2008, the market had changed and Fortress, a publicly traded hedge fund, was getting nervous.

The confidential reports show that in the infamous in-camera meeting Oct. 18 when council agreed to provide up to $100 million in interim financing, staff argued not to “take out” the developer and that the project remained financially viable.

That report, written by former deputy city manager Jody Andrews, the village’s project manager, pointed out that Millennium was suffering from modest cost increases of between six and 10 per cent, or $60 million to $100 million because of global and local market pressures.

(A city press release issued Thursday night announced that Andrews had resigned his post.)

Despite that, he said, the company had “performed well” and was on schedule with only 13 months to completion.

More importantly, he noted, costs were now “crystallized” because 100 per cent of the major building trades were contracted, as were 90 per cent of the sub-trades. As a result, the city and the lender had certainty over the remaining costs.

The confidential report indicated that when Millennium received the $750-million loan from Fortress in September 2007, it projected a net profit of $135 million.

Andrews said that profit had sharply declined to between $38 million and $78 million by October 2008, but that the city’s money was still relatively safe.

He said city staff looked at the pros and cons of “taking out” Millennium under its contractual rights and replacing it with another developer, and concluded that there was no compelling reason to do so.

“Millennium’s ongoing role in the project would avoid a loss of confidence by future purchasers who could be potentially “scared off” by a material change in project management and delivery, he said.

Andrews gave councillors three options: do nothing, refinance or provide “protective advances” until the city could convince Fortress to restart its loan payments.

The first two were considered too extreme because they would trigger expensive clauses and still require the city to inject upwards of $100 million to stabilize the project.

Andrews said the third option, the protective advances, was the safest for the city.

“This action does not precipitate the unnecessary and/or premature removal of Millennium and provides the most attractive risk profile to the city in moving forward,” he wrote.

“Staff reiterates that, at this time, the project is viable financially and the best possible outcome is for Millennium to complete the project on schedule.”

Council unanimously endorsed the proposal.

© Copyright (c) The Vancouver Sun

As the tumble in real-estate values and cheap mortgages boost first-home affordability, the opportunity to find and price a residence with measured purposefulness is great, but daunting

Kim Pemberton
Sun

Dan and Lucy Robison (above, with children Joan, 14, and Roland Simard, 12) bought in Coquitlam. Photograph by: Jenelle Schneider, Vancouver Sun, Vancouver Sun

Clayton Aelbers bought in Burnaby. Photograph by: Bill Keay, Vancouver Sun

As a first-time homebuyer Cynthia Barros is excited about owning her own place, although worried about getting the timing right.

Barros and a friend plan to co-own a home, their way of possessing that first rung of the property ladder.

And while the two women have saved enough money for a down payment and figure they can get a townhouse or apartment in Burnaby, New Westminster or Coquitlam for $400,000 or less, there is one drawback.

Barros has just finished university, but has to wait until she has a full-time job before she’s eligible for a mortgage. Her friend already has a full-time job.

“I’m happy prices are going down. It helps people like us who couldn’t afford a place before the market crashed,” Barros says.

“I definitely want to get into the market now because I know it’s going to recover.”

Barros, although unable to buy currently, is an anomaly among first-time buyers because if she could she would take the plunge.

Most first-time buyers today are hesitant and will end up waiting too long before getting into the market, David Watt of the Real Estate Board of Greater Vancouver says.

The irony is they are in a much better situation now in a buyer’s market with low interest rates. But they will wait until it’s a seller’s market before making a purchase, Watt says.

“It’s human nature. Buyers love to buy when everyone else is buying and that is typically a seller’s market,” he says.

Watt adds he talked recently with a mortgage lender from one major charter bank in Vancouver who reports there’s a huge inventory of pre-qualified “people who are just sitting on the fence.”

“It takes more courage to go against the crowd and buy in a buyer’s market.”

Others in the housing field agree it’s unusual more first-time buyers are not jumping into the market, considering the benefits. These include lower interest rates and the ability to shop around to negotiate the best deal possible without worrying they will end up in a bidding war or have to forgo the home inspection clause.

“People will buy but they just need to know they have a really good deal. The problem is they don’t know it’s a good deal and that insecurity breeds inaction,” Cam Good of Mac Real Estate Marketing Solutions says.

Good believes the time is right now, particularly for first-time buyers because of the affordability.

“It’s as good as it gets now in terms of affordability. It’s been a long time coming.”

Clayton Aelbers, a first-time buyer in Burnaby, knew a good deal when he saw one.

The 25-year-old steel fabricator bought last February and paid $255,500 for an apartment listed for $279,000 across the street from Central Park. The owner had died and her sister in Australia wanted a quick sale so he was able to “scoop in” before the first open house and buy the place.

“I had looked at over 100 places and was on the computer every night searching,” says Aelbers.

His only negative was an earlier pre-approved interest rate of three per cent for three years had run out and he ended up with a four per cent rate. Still a good rate, he says, so he doesn’t have much to complain about.

– – –

The days of standing in line overnight to get first dibs on a condo appear to be over at the moment and buyers have the luxury of shopping around for the best deal.

“The panic has been taken out of the purchase,” says Peter Simpson, of the Greater Vancouver Homebuilders’ Association.

“Before people would line up overnight to buy a condo and they felt if they didn’t buy right then and there the guy behind them would. Now they can take their time to get the right place in the right location. But they need to know what’s involved.”

Catherine Reid, 31, who is a single professional, bought her first home — a two-bedroom apartment in New Westminster — for $250,000 in October.

Thanks to the market switching from a seller’s market when she first started looking four years earlier to a buyer’s market she was able to take her time.

“There was a lot of talk of the market changing and I thought I’d take advantage of that,” says Reid.

“I had more time to consider places. Before I didn’t have any time and I couldn’t put any subjects into the contract. I felt a pressure to make an offer right away,” she says.

Wanting to take a break from that pressure cooker, Reid at one point took a break from looking for 18 months when prices climbed too high.

She began her search in earnest in August when it was evident the market was becoming a buyer’s market.

The wait worked out for Reid, who feels she benefited from lower prices.

The home she ended up buying, after only two months back on the search, was originally listed for $30,000 more than she paid.

Her return to the market and the decision to act quickly is typical of young single female buyers, says David Watt of the Real Estate Board of Greater Vancouver.

“As a rule, they are quicker to do it. They’re serious about long-term investing. They don’t talk about flipping. They’re real believers in the long term and controlling their own destiny. Any realtor on the street will tell you that,” says Watt, adding that unfortunately the information is only anecdotal.

Cameron Muir, the B.C. Real Estate Association’s chief economist, says he believes buyers today not only have more time to investigate their choices but they have the ability to negotiate an attractive price.

“The irony of markets is that there’s no shortage of buyers when prices are near a peak and a scarcity of buyers when prices are near a trough,” he says.

“Affordability is much better today than it has been for two years. This bodes well for the first-time buyers, particularly when you look at low interest rates. . . . Unfortunately some buyers are sitting on the fence anticipating even lower prices.”

Muir says he doesn’t expect prices will make any further significant drops. And he anticipates, once buyer-confidence returns, a “modest increase” in sales by the spring.

“My advice would be to secure your financing, get the lowest (interest) rate and then take your time. You don’t have to rush in and take the first home that is acceptable” he says.

First-time buyer Dan Robison and his wife bought his three-bedroom townhouse in Coquitlam two weeks before getting married last July. He is 48 years old.

The couple paid $369,000 for a home he estimates was under market value. A similar townhouse next door sold for $10,000 more. Robison credits a first-time homebuyer seminar he took through the Greater Vancouver Home Builders’ Association with giving him the knowledge to buy with confidence.

“It was a huge help. I should have a badge — I attended 10 shows for 10 years,” says Robison.

“When it came time to buy I had a lot of information I learned from the experts (speaking at the seminar panel).”

Robison says he was so confident he bought a home offered by an owner and went without a realtor himself for a further cost savings.

He remembered a piece of advice from one of the seminars and that was to ensure the paperwork was in order so the seller couldn’t opt out of the deal or keep his down payment.

Robison says this advice was critical for him because after the deal was signed the seller had 10 other calls from others wanting to buy the home for a higher price.

“You hear horror stories of people losing deposits. But we did our homework. This is a life-time investment and if things go wrong with the property there’s not a lot of recourse after it’s bought,” says Robison.

His advice to other first-time buyers is to educate themselves by taking a course, make sure they get a home inspection, and don’t pay more than what they can afford.

The Greater Vancouver Home Builders’ Association will be sponsoring the 15th annual First Time Home Buyers seminar on Tuesday, March 24 from 7 to 9 p.m. at the Sheraton Guildford Hotel in Surrey.

Anyone interested can call 604-588-5036 to register for this free event.

(This year participants are being asked to bring a non-perishable food item to donate to the Surrey Food Bank).

Simpson says typically 800 people attend each year, making this the largest event of its kind in North America.

Speakers include a representatives from the banking community, real estate, home warranty, home ownership protection office, the Canada Housing and Mortgage Corp. and a real estate lawyer.

“We get high-level speakers to cover everything you need to know,” he says.

© Copyright (c) The Vancouver Sun

Bob Ransford
Sun

If you are a Vancouver property owner you should know by now that you and your fellow ratepayers are pretty deep into the real estate development business. Oh, and by the way, business isn’t that great today.

Like many developers today, you are suddenly being confronted with the realities of the Olympic village development — a risky business made even riskier during a world-wide economic tsunami. The ride can be a frightening experience when the markets are moving downward. Hold on tight.

It’s normal business for city governments to collect property taxes, pay people to maintain roads and sewers and plan land use. Usually cities don’t actually develop land.

With the veil of secrecy that until recent days almost shrouded all the details of the Olympic Village development you can be forgiven for not realizing your city councillors actually got into the development business, spending your tax dollars and pledging your collective assets to a multi-billion-dollar real estate development project that from the outset seemed risky at best.

But with real financing problems and a new council having to face the realities of meeting the commitment to deliver the housing for Olympic athletes only months from now, general details of the project are surfacing.

They paint a not so pretty picture.

How much trouble are taxpayers in? Has the Millennium development company provided enough collateral security to the city to protect taxpayers from ever having to actually spend tax dollars to cover project losses?

Will the city ever recoup the actual costs of assembling and developing the Southeast False Creek lands?

These are all valid questions and ones that need to be answered if taxpayers are going to ever know how pretty, or not, the deal ends up being. But they are not easy to answer today.

So far, only a few people at city hall have all of the details. Only the general details have been made public, so speculating on the eventual outcome of what has become a very complex business deal is as risky as the venture itself.

Meanwhile, eventual market conditions will largely influence the final outcome. None of us have a crystal ball that reveals the future of the real estate market.

However, with these details still to come, perhaps it is time to start to formulate a couple of key questions that should be part of the public dialogue now. These questions can help everyone learn from this whole experience.

You might ask at the outset: how did the city get into the Olympic Village development and the larger real-estate play that encompasses the other 68 acres of taxpayer-owned land in Southeast False Creek?

It’s ironic the city has risked taxpayer dollars by getting into the one game that seems to have almost obsessed Vancouverites over the last five or six years — the condominium “game.”

There’s probably a big lesson in that reality.

Perhaps we’ve turned the business of building, selling and buying homes in which people might live into something that it isn’t and shouldn’t be. Buying a home — a roof over your head — shouldn’t be some kind of exercise in mass consumerism and a speculative sport. Enough said on that one.

When the city committed to VANOC, the organizer of the 2010 Games, to deliver the athlete’s village for the Olympics, few probably realized city hall was writing a blank cheque. That whole issue can be debated when we are doing the post-mortem on the Games.

The second question that needs to be asked is: should local government, or any government for that matter, be in the real estate development business?

Vancouver‘s city council determined quite a number of years ago that Southeast False Creek would become a showcase project for sustainable urban development. Councillors decided the city would be the land developer, selling land to residential and mixed-use building developers to generate a return to the city’s Property Endowment Fund.

The Southeast False Creek development is larger than anything the city had ventured into in the past as a land developer using the PEF.

What business expertise resides in city hall to negotiate a complex business deal of this magnitude with sophisticated private sector developers?

Are the governance systems at city hall, with councillors doing little due diligence of their own and relying solely on staff assurances robust enough to protect taxpayers?

When councillors voted to approve the sale of the Olympic Village lands to Millennium in April of 2006, they relied on a staff report that stated that Millennium’s purchase price was “guaranteed to the city with no risk-sharing” and Millennium presented a financing plan for the project that was ”independent of market conditions . . . and does not ask the city to assume any of the marketing or financing risk in the development.”

What knowledge and business experience resides in city hall sufficient for a senior member of staff to make such a declaration?

If these questions can be debated and answered as this project continues to unfold, perhaps the city might be better able to manage the final outcome of this project to minimize negative impacts on taxpayers.

Let’s hope.

Bob Ransford is a public affairs consultant with CounterPoint Communications Inc. He is a former real estate developer and was a member of the campaign management committee for the NPA and mayoral candidate Peter Ladner in the November civic election. E-mail: [email protected]

© Copyright (c) The Vancouver Sun

Arrangement takes the uncertainty out of repayment

Michael Sasges
Sun

Mike and Lisa Averbach are partners in business and life. Among their observations about people looking for a mortgage is that, all too often, they bring a poor credit history to the search.Photograph by: Ian Smith, Vancouver Sun

The Canadian-mortgage drama needs a Greek chorus, those Athenians the ancient playwrights used to comment and explain and emend the drama, here the meaning of borrowed money priced at a 50-year low.

The first observation this chorus might make:

Three out of four first-time homebuyers in Canada probably don’t know how good the news is.

A mortgage insurer, the multi-national Genworth organization, is the source of that conclusion.

It reports that in a recent test of Canadian first-time homebuyer knowledge of mortgages and homebuying terms and concepts only 25 per cent of the participants correctly answered more than seven out of 10 questions; fewer than one per cent answered all 10 questions correctly.

”Results indicated that first-time homebuyers have a lack of understanding of common mortgage terminology such as credit rating; mortgage term; variable or fixed interest rates; amortization; default insurance; and the debt service ratio,” a Genworth news release comments.

To which Vancouver mortgage-broker Mike Averbach of Averbach Mortgages might have said, I could have told you that.

Averbach is a natural candidate for membership in the Canadian mortgage-drama Greek chorus. Money may be cheap right now, he cautions, but borrowed under a mortgage with a variable rate, it could become very expensive very quickly, turning drama into tragedy.

”Unless circumstances require you to take a floating product such as a line of credit or an open variable, we recommend a solid fixed-rate mortgage for the security and peace of mind of knowing what your payment is going to be for the next few years,” Averbach said in an interview.

Peter Veselinovich of Investors Group is another believer in the fixed-rate mortgage for the first-time buyer.

”Think of the difference between a short-term, or variable-interest rate, and a longer interest rate as the insurance premium that you are paying for certainty,” the Investors Group vice-president said in an interview.

”Today, this premium is very low. Longer term fixed rate mortgages may be the best choice for many first-time buyers or other borrowers who want certainty around their mortgage payment and the pace at which the mortgage is repaid.

” . . . If changing interest rates keep you awake at night, selecting a fixed-rate mortgage, preferably with a longer term, is the answer.”

Veselinovich, as you might expect of an executive responsible for an investment syndicate’s mortgage investments, has some ideas on the ideal contents of a mortgage.

– Prepayment ”privileges” ”Ensure that the pre-payment arrangement meets your requirements if you were to have extra cash for an additional monthly payment or a lump-sum payment.

”Typically, this amount is about 15 per cent annually. Many lenders will allow a special, one-time prepayment that is larger . . . . Always inquire about these privileges, and ensure that any special consideration is documented . . . .”

– Portability ”The ability to ‘port’ your mortgage to another property if you move may allow you to retain an attractive interest rate, while blending it with a new rate in the event you need additional funds.

”If there is a chance that you may move to a different city or province, ensure that your lender can operate in the new region, otherwise, you will not be able to port the loan, and would likely be subject to penalties to pay out your existing mortgage.”

– Flexibility ”The ability to convert your mortgage to other products or terms is important. As an example, if you select a variable-rate mortgage and interest rates subsequently increase, you may want to switch to a fixed-rate mortgage. The ability to do so, and the cost around the switch, may vary among lenders.”

– – –

Q: Variable rate mortgages have traditionally generated lower expenses for a borrower over a mortgage term. Your news release says don’t expect that history to repeat. Why?

A: Not that long ago variable, or floating, mortgages were available at a discount off the prime bank rate of 9/10ths of a percentage point. Now, they are being offered at a minimum of prime plus 6/10ths of a percentage point, and some are even as high as prime plus 1 1/2 points.

To put that in perspective, a homeowner who received a variable-rate mortgage from one of our preferred lenders in 2007 would be re-paying the mortgage at a rate of 2.6 per cent. Compare that with a client who decided to go with a current variable-rate mortgage-offer: he or she would be paying 4.1 per cent at a minimum. On a $300,000 mortgage, that’s a difference of $236 a month on a traditional 25-year amortization.

Unless circumstances require you to take a floating product like a line of credit or an open variable, we recommend a solid fixed-rate mortgage for the security and peace of mind of knowing what your payment is going to be for the next few years. We’re certainly not saying that one shouldn’t accept a variable-rate mortgage and in fact, over the long run, a variable rate mortgage is still a viable option but a good plan and close monitoring of both fixed and prime rates will be more important.

Where variable mortgage borrowers once had a nice cushion should prime increase, they will feel the pain in the payment much faster with today’s floating options.

All variable-rate mortgages allow you to lock in at any point but what that rate will be when that time comes is anyone’s guess. Making sure your variable-rate mortgage commitment has a guarantee of the best available fixed rate at time of conversion is vital.

Q: What do you know about mortgages that you think new-to-market house-hunters, or the typical first-time homebuyer, ought to know?

A: It’s important that new house-hunters realize that with a small amount of planning and preparation, the mortgage process can be easy and free of stress. The financing portion of the home-buying process should be the first step and not the last, a chronology too many mortgage professionals see too often.

I can’t emphasize enough how important it is for house-hunters to book an appointment with a mortgage professional so we can go through a full analysis of credit and income. This will give them an accurate feel for the amount of house they can afford and will address any possible issues before they begin their search.

Q: Why does Averbach Mortgages, in its literature, distinguish between the pre-qualified homebuyer and the pre-approved buyer?

A: It’s imperative that first-time homebuyers are pre-qualified, not just pre-approved when they are at that point of taking a plunge into the market and making an offer on a home.

The first question a realtor usually asks a client is, “are you pre-approved?” What they should be asking is, “are you pre-qualified?”

A pre-qualified buyer has backed up an application for a mortgage with a demonstrated proof of income, a salary letter and a recent pay stub, for example, and has demonstrated the availability of a down payment by a three-month history of contributions, for example, or a gift letter from an immediate family member.

Typically too many people produce their documentation only after they have made an offer on a home, with subjects. There’s nothing more surprising or embarrassing than being declined for a loan because the information on the application doesn’t match the documentation. We always insist that income and downpayment be proven before making an offer.

Recently, some lenders have shown a preference for the insurer they use. If the lender insists on sending the deal to CMHC it becomes impossible to buy a house with a rental suite in it if you are relying on the rental income unless the suite is “legal.” CMHC does not allow income to be used that is generated from an illegal suite.

Thus, if you are trying to buy or refinance a home and you need the rental income to qualify for the loan you may be out of luck. If the bank you want a mortgage from insists on sending the deal to CMHC for insurance, ensure the suite is legal and has been registered with municipal authorities or the loan will be declined.

Of course you can avoid all of this if you put 20 per cent down and thus do not require mortgage-default insurance.

Q: What do you know about the ability, and inclination, of financial institutions to underwrite first-time buyers these days?

A: Although it might seem easier to get into the market now because real estate prices have dropped dramatically, lenders are tightening up their qualifying screws.

They are making it harder and harder to get a mortgage as their appetite for less-than-perfect borrowers is decreasing for fear of default. CMHC has increased its minimum scores for high-ratio loans so it is more important than ever to manage your credit wisely.

We are continuously educating our clients on how to better their credit to qualify for a good mortgage. Many clients don’t realize how easy it is to damage their credit and conversely how quickly it can be repaired if the right steps are taken. If you do have a problem, now is the time to deal with it! If you fix the issue today you will be back in business before you know it.

People who have high credit scores will have access to more products, a larger number of lenders, and the possibility of better rates. A good credit score has never been more important than it is in today’s lending environment.

Q: What’s your opinion of mortgage rates, today and in the immediate future?

A: Rates are as low as they’ve been in a few years, but they should be even lower.

Lenders haven’t just tightened up on their lending qualifications. With bond yields being where they are, the spreads on fixed-rate mortgages are fatter than ever.

Five-year fixed-rate money should be available at the high end of three per cent, but with the profitability reports down, banks are left with little choice but to increase the spreads.

To be fair to the big banks, their costs of raising funds have also increased and appeasing the shareholders is a top priority. This is especially evident in the variable, or floating, mortgages.

Q: What do you want Vancouver Sun readers to know about the current mortgage environment?

A: There are very few situations — if any — where you have the opportunity to work with an expert during the entire financing process . . . for free! In this type of lending environment, it is more important than ever to have an experienced mortgage professional advocate for you and provide you with the essential information and advice you require as well as ensure that you get the product best suited to your specific needs. This is the biggest purchase you will make in your life. So get the help of an independent expert.

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