It’s no wonder customers are getting frustrated. With CIBC selling FirstLine, then the bank pulling out of stated income mortgages, and most major Canadian banks pulling out of discounted mortgages in the last six weeks, it’s easy to see why customers are starting to think they can no longer rely on the banks. Now, another major lender in Canada has some more disappointing news for anyone looking for a Vancouver, Montreal, or Toronto mortgage – TD Financing Services will no longer be offering non-prime mortgages.
A non-prime mortgage of course, is a mortgage that’s given to someone who doesn’t qualify for a conventional mortgage. It can happen for many reasons, blemished credit and a small down payment being the two big ones; but banks are usually still willing to give mortgages to these borrowers, as long as they meet other criteria. That other criteria doesn’t seem to matter anymore to TD, as they made the announcement yesterday that as of March 31, 2012, they will no longer be offering non-prime mortgages.
Why the move?
Along with the announcement, a representative from the bank also said, “Ultimately we decided it wasn’t a core part of our focus on building a franchise business. The TDFS portfolio has not grown to an economically viable size.” TD said at the time that the decision wasn’t due to defaults on non-prime mortgages, but rather the fact that TDFS simply did not have enough non-prime mortgage deals to remain competitive, with just 0.2% of their mortgage business being taken up by non-prime mortgages. And, the spokesperson said, increasing that percentage to keep up with the competition, who are continually offering more and more non-prime mortgages, is “not something we’re prepared to do.”
But, there is good news for this among consumers, even those who can only meet the non-prime requirements put forth by lenders. Unlike CIBC, TD also said in the statement that they would not be exiting the mortgage broker channel and that, “TD Canada Trust remains committed to the mortgage broker industry and this announcement does not affect TD Broker Services.”
But won’t a mortgage broker run into the same problems as a consumer when they try to obtain a quote for a sub-prime mortgage? Yes, most likely they will. The good news is though, that broker will still have a huge list of lenders they can reach out to. Lenders that are still interested in offering a mortgage to those who qualify, either with prime or sub-prime.
