The Bank of Canada, widely known for its plot-twist-worthy decisions, went for the predictable ending this round. It left its key policy rate at a 22-year high of 5.00% - just as the bond market expected.

Compared to a 25 bps hike, today's rate pause saved an average floating-rate borrower from seeing up to a $70 increase in their monthly payment. (The average Canadian mortgage amount is $351,692, according to the latest TransUnion data.) 

WealthOne Bank of Canada is one of the most competitive near-prime lenders. So, it was concerning to hear that it's under Finance Minister Chrystia Freeland's microscope.

Her scrutiny of the company was reported by the Globe this weekend. In a nutshell, the DoF made the company jump through all sorts of hoops due to alleged concerns about national security and potential money laundering. Among other things, Freeland's office forced the bank to cut ties with three key investors with apparent links to the Chinese government.

This begs the question, is any of this relevant to mortgage borrowers and brokers?

We spoke today with WealthOne President & CEO Paul Leonard to learn more. Here's what he told us.

It's always interesting to check in with mortgage fintechs like Pine. After all, if investors like Greylock Partners, Inovia Capital and Intact Ventures value the company at $75 million and hand them $30 million, they must be doing something unique.

On Sept. 11, Pine unfurls itself nationally across Canada—everywhere but Quebec (possibly because of the nightmarish red-tape, language rules and compliance environment in the province).

The company sells an ultra-low rate and targets a younger demographic with its simple, fast process. Two out of three customers breeze through its whole application on their smartphones, the company says.

I recently spoke with Co-founder Justin Herlick, who just came off his best month ever since opening the doors in January 2022. My goal: Peek under the hood and see what's making the Pine tree grow.

We dug up four notable takeaways:

Canada's economy needs stormy weather before the sun can shine. And on Friday, we got some dark clouds.

Our economy shrunk, and joblessness surged below the border. For all anyone knows, Canada may already be in the midst of a technical recession (defined as two consecutive quarters of negative growth).

For low-rate enthusiasts, it was a glimmer of hope that the top in rates might be in. Canada's 4-year swap rate dove another 7 bps, per the chart above. And—while it's not unheard of that some banks would hike fixed rates in the next week or so—sliding swap rates make that less likely.

Following the data, the economic establishment hurried to declare that rates had hit their ceiling. But long-time readers will recall us reporting that same market sentiment last spring, and we all know how that turned out.

Here's more of the macro nitty gritty, and what to expect next...

"HSBC Canada offered market-leading rates," the Competition Bureau wrote today, with respect to RBC's bid for the company.

Observe the word "offered" — in the past tense because, barring a miracle deal blocker from the Minister of Finance, Canadians may soon never see HSBC's leading rates again.

The Competition Bureau has officially approved RBC's takeover, despite outcry from consumer advocates and overwhelming evidence of HSBC's leadership position in products like mortgages.

"HSBC Canada personnel viewed their own mortgage business as a 'rate disruptor' in the Canadian market, and pursued a strategy focused on low publicly-posted rates," the Bureau wrote in its report to the Minister of Finance.

In fact, HSBC systematically advertised Canada's lowest and most transparent uninsured mortgage rates since 2016. The Competition Bureau failed to mention that, however. Instead, it noted that RBC documents indicated that HSBC Canada "often issued below market rates" on mortgages. If ever there was an epic understatement from a Canadian law enforcement agency, that might take the cake.

MLN's latest Canadian Mortgage Rate Survey shows HSBC with Canada's lowest nationally advertised uninsured mortgage rates in the:

• 2-year term, at 6.54%
• 3-year term, at 6.29%
• 5-year term, at 5.94%
• Variable market, at 6.40%
• HELOC market, at 7.20%

HSBC can hold its head high. It has not only been Canada's most formidable national uninsured mortgage competitor for the past seven years but also its most transparent.

If you're a mortgage advisor seasoned enough to recall the "good old days," you'll surely remember the arduous process of finding suitable lenders for clients.

It was an era defined by quaintly archaic tasks, like:

• manually scanning endless product guides
• pouring through neverending rate sheets
• engaging in delightful games of phone tag with your lender rep.

How did we ever survive this?

Fast forward to 2023, and there's suddenly a tech race to help brokers find lenders and products more quickly.

Today, we profile a product that's making that race more interesting: Scarlett Genius. It's a brand-new system designed to help mortgage brokers identify the best rates and products for their customers, all in a few minutes.

Scarlett Genius launches September 5 as a 30-day pilot.

Here's what it does...

• Genius integrates fully with the customer's mortgage application.
  • i.e., Upon receipt of a customer application—or as you complete a basic application in Scarlett—it tells you which lender's products are a fit.
  • Scarlett says that, unlike Lender Spotlight, no tedious double-entry of data is required. Although, Spotlight does let users auto-populate some fields with the click of a button.
  • Like a sommelier of mortgages, Genius starts making recommendations as soon as you give it parameters (the minimum parameters are the deal's income, home value and mortgage amount). It fine-tunes its recommendations as you pull the credit score and enter the amortization, closing date, occupancy status, term type, province, and deal type.
  • Scarlett claims it makes more refined recommendations than competitors because the recommendations are based on more of the customer's application data.
  • It shows brokers the rates and finders fees, too.
• Genius uses artificial intelligence to learn the broker's preferred lenders and position those lenders more prominently.
• Like Spotlight, there's also a keyword-searchable database of lender policies.

In the words of Scarlett President and CEO, Joe Fakhri, "Scarlett Genius is a pure deal placement system. Everything else is merely a glorified rate database."

In Q2 of next year, Scarlett plans to launch phase II of the system. "It will recommend changes to the deal to make sure it's approved by the lender," Fakhri says. "It will also calculate the likelihood of the lender approving the deal."

Scarlett Genius screenshots

Here's how you filter products...

How you search policies...

Where you enter the deal type...

The results screen...

The product suggestion screen...

About Scarlett

Scarlett's primary business is selling a deal management platform and the industry's #1 payroll solutions to brokers.

It's a multi-tasking beast, offering document collection, lead nurturing and CRM (email automation) and payroll, among other things. Scarlett is particularly known for its filters. They let brokers generate new business opportunities by scanning their database, using simple or very complex queries.

It can identify everything from clients who have non-subject properties renewing, to high-income borrowers with low credit scores, to borrowers with fixed-payment variables, to clients in specific industries (if you want to run a healthcare industry promotion, for example).

It can also send pre-populated applications so clients don't have to enter all their data again (we love this feature). It also analyzes the file to request documents automatically based on the deal type, and safely tucks docs away in a SOC-2-compliant secure storage facility.

Unlike DLC Group's Velocity and M3 Group's BOSS platforms, Scarlett (like Lendesk) is not owned by a broker network, so brokers have no concern about being able to switch firms and keep all their data. It allows for reassuring no-strings-attached relationships that some brokers refuse to live without.

And unlike the competition, Scarlett claims to provide access to more lenders, thanks to its deal with Filogix and Newton. It's the only platform partnered with both networks.

One downside: It doesn't have access to National Bank, accessible only through M3's BOSS platform (you can import the deal data via CSV file, however). But Scarlett does allow access to HSBC if the broker is authorized.

"The real upside, for an organization that was previously pure Expert / Filogix, is that the transition is very intuitive," says user and veteran broker, Ron Butler. "So, less training and less downtime."

On that note, Scarlett offers group training three days a week and also does private training.

Reader note: As with all MLN product reviews—unless explicitly noted—we have no affiliation with this company. Product announcement stories are merely for our readers' knowledge. MLN tries to stay as impartial as an NFL referee. Albeit, that may be a bad analogy.

Let's start with some good news.

After weeks of nail-biting amid surging rates, Canadian bond yields have graciously returned to their August starting point, shedding 26 basis points from last week's 16-year high.

That's some welcome relief, however temporary it may be.

The difference between insured and uninsured mortgage rates is wider than a canyon nowadays.

That’s creating unusual scenarios where it’s actually cheaper for a #low-ratio# borrower to buy #transactional insurance# and get a default-insured mortgage than to pay a higher uninsured rate.

Sometimes, it even makes sense for borrowers to pay for insurance themselves rather than get an insurable rate (where the lender buys the insurance).

It all depends on the circumstances, including:

The Bank of Canada isn't in the habit of hiking, pausing, hiking, pausing and hiking some more.

If the past is any guide, it prefers to make necessary adjustments to monetary policy in tight bunches.

In MLN's interview with Housing Minister Sean Fraser last week, he noted how the government should offer more builders lower financing costs to spur development.

One way that Ottawa is already doing that—and a program the Liberals might increase funding for—is the Rental Construction Financing Initiative (RCFI).

If you're interested in building a 5+ unit rental building, read on because this program offers developers exceptional benefits—including but not limited to fantastic interest rates, flexible construction draws, easy payment terms and more forgiving underwriting than a typical lender.

This is a government program one can get behind—for three good reasons:

1. It barely costs taxpayers a thing (it's not a subsidy in the traditional sense)
2. It aims to help mostly middle-class renters (who all too often get lost in affordable housing discussions focused on low-income brackets)
3. Imperfections aside, it's pretty developer-friendly.

One might even say the government's RCFI program is making rental construction financing great again. Here are the highlights...

What is the RCFI?

“A record 95% of new mortgages in June 2023 were fixed-rate,” reported National Bank Financial’s Daren King on Tuesday.

This all-time low for variable market share sharply contrasts with the months preceding prime rate's uphill journey. Back then—just 18-24 months ago—up to 57% of mortgagors took their chances with a variable.

Contrary to NBF’s report, however, the fact that borrowers are giving the cold shoulder to variables isn’t overly surprising.

There are at least six reasons why today's mortgage shoppers don’t want to float:

Some lenders have an unconventional idea of partnership. They boldly label brokers as their "partners" but treat them with the same respect one might reserve for a telemarketer who calls during dinner.

If you're a lender, one strange way to show broker partners you 'care' is to withhold your best rates from them, giving the lowest pricing only to your retail reps. It's almost like telling brokers, "You're expendable. Deal with it."