Too Much or Not Enough

Plus Minus

According to yesterday’s Globe and Mail the Bank of Nova Scotia reported record earnings derived from amongst other services, solid domestic personal banking operations. It’s a good day if you are a Scotia banker. Equally it is also a bad day because a bank flush with cash has a problem. They desperately need to find people to borrow those monies so that the very same bank can make profit.

Today

In today’s Globe and Mail the solution is provided – a 5 year fixed mortgage rate at 2.97%.

Minus Plus

No doubt if you are buying a home in Vancouver the purchase price will leave your pocket minus some cash. On the plus side the banks will tell you that you can replenish your empty pocket with a cheap mortgage – at least for 5 years. They probably won’t tell you that after that period of time has expired all bets are off.

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Without Prejudice Marketing Plan

Flush with cash the banks are trying hard to get people to borrow money. Among the ‘newer better and never seen before’ marketing plans offered is one offered by the Royal Bank of Canada.

According to the Globe report RBC will pay $1,000 in referral fees if an agent delivers 5 first time buyers who sign up for one of their mortgages. Banks prefer the first timer as they usually need more money – a problem banks have right now. In B.C., if a buyer deals with RBC because their agent made the introduction then that buyer should expect their agent to declare that he will be paid by the bank for the referral. I suspect that some will.

It’s Hard For Some

I don’t like this or other RBC type incentives. I believe they have the capacity to make transparency opaque and cloud the motivation optics. Are the banks complicit in pre-determining what is truly the best course of action for the consumer?

While this is a righteous viewpoint at the same time I recognize that not all real estate sales people are capable or able to carve out a living in real estate sales. Quoting a recognized name “this industry is like the rolling the dice, it is a business where everyone is invited to go broke.”

Thus, for those on the edge, the incentive of $1,000 may be the only thing they have in their pocket. So the question from those serious about buying or selling their Vancouver home the question that begs to be asked is how long have you survived in this business called real estate.

About Larry Yatkowsky

Larry is a recognized real estate expert. A veteran professional, his experienced counsel leads Vancouverites in his west side community to place their trust in a man passionate about his work. Uncompromising ethics bring a balanced approach to realizing your real estate dreams.

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*Disclaimer: Statistics Courtesy REBGV. While believed to be accurate they are not guaranteed.
**Numbers provided may vary as they are dynamically posted by the REBGV.

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