News

Ownership Announcement
Monday, July 29, 2013

Dear Valued Customer

We would like to take this opportunity to thank you for your business and also, let you know what exciting changes have occurred at Power Mortgages Inc.

Effective May 22, 2013, the owners, Kevin Power and Ann Turner have retired, after many successful, years in the mortgage industry. It is now time for them to spend some quality retirement time with their families and grandchildren.

To that effect, after a long and exhaustive search, we are excited to announce that Mr. James (Jim) Dueck has purchased and will continue to operate Power Mortgages Inc. at the same locations. There will be some changes in that Power Mortgages will become part of Mortgage Architects, as a franchise operation.

We feel, that both Jim and Mortgage Architects reflect the core values of Power Mortgages and ourselves. They both have a commitment to continue a high level of service and top notch rates for all of our clients based on a strong reputation for reliability and innovation within the mortgage industry.

We wish to thank everyone for the opportunity to have served you over my career of almost 21 years with 11 years under our own brand. We have lots of fond memories of all our clients.

We know that Jim will be one who will carry on our traditions with new ideas and a commitment of success based on almost 8 years of brokerage experience and previous successful business experience. He is a lifelong resident of the area and comes with high regards and a strong, positive reputation.

Kevin J. Power
Past President,
Retired

Jim D. Dueck
President
jim@ddueck.com
519-897-3955 (direct)

Why Are The Banks Worried?

This spring at a mortgage brokers summit, we heard the first whisper of concern from Canada’s lenders. It was there that we were told that Canadians had the highest rate of debt per person in the world. It is hard to believe given how much we’ve seen on TV about American consumer debt.

We tend to think that as Canadians, we are much more conservative in all aspects of our lives, than our American neighbours. In the last few weeks a couple of banks have issued reports about the level of our consumer debt. It appears the average Canadian has increased their consumer debt dramatically over the last decade. In the mean time our real income has not increased during that time. After years of finding attractive new ways to offer more and more consumer debt, the banks are getting worried that we may not be able to repay it.

In fact, a worrisome percentage of consumers are spending more than they earn. Any number of events can affect our ability to repay debt. A significant or long down turn in the economy and it’s resulting loss in jobs, illness, divorce, overspending or a sharp increase in interest rates are all factors. The first factor most likely to affect our ability to repay debt is an increase in interest rates. Rate increases mean payment increases. With “real” income not increasing for the average consumer, making increased payments may not be possible for those already overburdened with debt payments.

Good Debt vs. Bad Debt

Power Mortgages looks at debt as being either good or bad. Good debt is an investment debt. A debt that buys you something that has a tendency to increase in value over time such as a mortgage or RRSP loan. Bad debt purchases perishables, things that decline in value or disappear all together over time. Purchases bought on credit for things such as furniture, appliances, cars, vacations or clothing are examples of bad debt.

The difference is, that with good debt, you can sell your house or RRSP and get your money back or more. This allows you to eliminate that debt and perhaps have some left over, depending on where you are in the life cycle of that debt. Mortgage debt takes care of a necessity of life, a place to live, while allowing the homeowner to see an increase in equity or ownership. Low interest rates allow more people to own their own homes because the payments are lower and competitive with the cost of renting.

While we do not advocate over extending your credit, you may find yourself being overtaken by the payments being made on credit cards or installment loans. If there is any equity built up in your home we would recommend to our clients to consolidate this debt with their mortgage. This should be a one time fix coupled with a more conservative approach to bad consumer debt. At the current low interest rates you will be providing a margin of safety for when the rates do increase. This also a good time to take advantage of the rates to do home improvements, purchase a recreational or investment property, or move up to a larger home as well as consolidating debt.

Identity Theft

Identify theft has become an even bigger problem than mortgage fraud in funding a mortgage. Lenders have been ordered by the Federal and Provincial governments to put in place better means of insuring the true identity of the client. One way is to have the client(s) go to an independent lawyer to show identification as well as having to show it to both the broker and their own lawyer. This precaution insures that the person who presents themselves as the borrower is the same person that has their identification checked by an independent lawyer and collects the money on closing. This method is now being implemented primarily on transfers, switches or equity takeouts where money maybe given over to a borrower. As inconvenient as this may be for all of us this process is better than becoming a victim of identity theft. The real owner of the home could very well find they have lost their house to identity theft without these safety measures being in place.