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Peter Kinch: The Peter Kinch Mortgage Team

Leading mortgage broker and investment-specialist Peter Kinch offers a cogent take on the challenges ahead for real estate entrepreneurs.


Video transcript below:

Peter Kinch, Founder, The Peter Kinch Mortgage Team-DLC

Peter Kinch: You know I have been writing for the Canadian Real Estate Magazine probably for the last 2 or 3 years and I found that it’s been very successful. It’s really good to get your exposure, you know I get more exposure out there and then when CRE decided to put an event like this on, first did it Toronto and it was a fantastic way to finally get, put a face and a name on some of the people who for me, I guess the clients and people who are reading the articles I write, a chance for them to get to know who I am and vice versa. Because you know when you write for a magazine, you have no idea who is actually reading that and it’s a rare opportunity to take a reader or subscriber to a magazine and all of a sudden get him in one room and to meet those people. So that’s unique and it’s a rare opportunity.

As a speaker, it was a no brainer or have a booth in the trade show forum. And I love the fact there is a trade show forum because it serves two purposes. Number one, it allows readers to come and listen to the speakers of people that they have read about. But number two, it allows everybody to mix and mingle in a trade show environment and when you combine those two, it’s very powerful and effective and having a booth here allowed me to promote some new products and allowed a lot of the people to take whatever the takeaways were from my speaking, come visit me at the booth and get into more details and ask more questions.

The response has been very powerful, very effective, you know obviously what’s natural and normal is that when people are speaking in the rooms all the audience is in there. But on the coffee breaks and the lunch breaks and the networking opportunities, the social last night, it’s just been non-stop Q&A, non-stop questions and again it serves two purposes. It allows the audience a chance to question me on some of the things that I might have mentioned in my talk, but conversely it allows me to get to meet the people that are reading the magazine and find out who that audience is and get to know some of my clients.

Well, we are going to see a major shift in variable rate mortgages and the way banks are selling them right now. First and foremost banks have already told us that there is not a lot of profitability in the variable rate mortgages. They get more profitability in the fixed rate mortgages. So they are going to be using the marketing to shift people away from variable rates into fixed rates. However, having said that, two things are going to happen. Number one, I suspect that Bank of Canada may even lower the prime rate a little bit depending on what happens in Europe and the global economic crisis and all that. The tendency will be for Canadians to say, “oh good, variables rates are cheaper”.

But in the reality is the banks because of the lack of profit margins are going to go from a prime minus discount to prime, to prime plus upto 1%, I think we are going to see repeat of 2008. If we see a repeat of 2008 and the discount disappears which it already has and in fact we go to a prime plus 1% environment, I am going to suggest that people do not take prime plus 1%, simply because when you take a variable rate mortgage, you are locking in that discount or lack thereof for 5 years and just like we saw in 2008-2009, liquidity will return to the marketplace and within 1 or 2 years, you will be able to get a prime minus product available. So really you are looking at a 1 or 2 year window, people should look at taking either a 1 or 2 year term as a parking slot and then maybe 2 years from now when the liquidity returns, get back into a prime minus 80 mortgage or again now is a great time to look at the 4 year mortgage rates.


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