Ron Butler Profile picture
Jan 11 4 tweets 2 min read
The Steely Determination Of The Richest Man in Canadian Lending

I don't really know Stephen Smith. When we walk past each other at a Trade Show he might say, "Hi Ron" and I will reply "Hi Mr. Smith" (He started at Zero to $3B, so he will always be Mr. Smith in my mind)

2/
But I have known of him and watched what he's done and talked endlessly about him with others in our business all these 28 years

He and John Webster at Scotia Bank are the entire Genesis of the Mortgage Brokerage Business in Canada. They are the Founders and the Builder's

3/
I was happy to learn of his acquisition of Home Trust (#HCG) because he is the perfect buyer, so much better than Brookfield or Fairfax

He is endlessly right in his deal making, incredible success at First National, the deal of the decade at Canada Guaranty ($1.3B profit)

4/
He moves from strength to strength

Brilliant, tough, decisive, and infinitely determined

He will close this deal and cap his career as a man who started with nothing and finished owning his own bank

To steal from Shakespeare: the stuff that dreams are made of

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More from @ronmortgageguy

Jan 13
Canadian Bank Regulator Studies Tightening Mortgage Lending: Welcome To The Gold Rush

@RobMcLister did a great piece on the details, to sum up: Peter Routledge the OSFI Superintendent opens consultations on tightening mortgage rules related to total lending versus income

2/
One BIG problem: any time any Regulator or Policymaker opens up the topic of Mortgage Rule tightening in the future 85% of the RE Agents and Mortgage Brokers start Advertising "Last Chance to BUY a house" just as night follows day there will be unwanted market stimulus

3/
At likely the worst time: First Time Home Buyers will be told its the last hope to buy before changes in lending rules take away their final chance to own a house

Because although they have come off totally insane highs in the GTA / GVA house prices are still Batshit Crazy

4/
Read 5 tweets
Jan 12
Why Are People Still Choosing Variable Rate Mortgages? Because Their Advisors Are Idiots

About 15% of new Mortgages are still Variable

Today, Variable Rate Mortgages have higher rates and payments than 1, 2 or 3 year Fixed Rates

So why the Hell would people pick them?

2/
I had this conversation yesterday with a mortgage shopper

Him: They always work out better than Fixed

Me: Generally, yes, but not right now

Him: The penalty is lower for Variable

Me: Not if you take a 1 - Yr Fixed then absolutely the same

Him: Prime Rate is coming down

3/
Someone, could be his Bank, could be a RE Agent, could be his random friend told him about the PIVOT and come Spring Prime Rate will drop which is wrong

It's a small group. the vast majority of clients chose Fixed Rates today and never longer than 5 years

So why Variable

4/
Read 5 tweets
Jan 10
Bank CEOs Start Talking About Mortgage Defaults = Truth or Spin?

Every time a Big Bank CEO says something other than "What's for lunch?" or "Where's the restroom?" You should absolutely know they planned out what they are saying because it will be recorded some how

2/
So if a Big Bank CEO says: "There will be mortgage defaults" it's was mapped out a week before

Of course, there are going to be more mortgage defaults

Many mortgage rates have gone up over 100% in 10 months, so Duh, there are going to be problems

But what's real?

3/
And what's manipulation?

When a Big Bank CEO says 2.5% of mortgages have problems, its theater

The CEO knows 95% of those "problems" can be solved easily with extended amortization or just aren't even serious to begin with but by sending out the "problem" message

4/
Read 5 tweets
Jan 5
The Initial Discussion Around #ChatGPT in the Banking Sector

If you work at, manage or support Bank call centres, you really need to begin retraining for a new career NOW

Bankers have a very clear understanding of what questions make up 85% of all call center inquiries

2/
It's actually a pretty short list of questions

And #ChatGPT can answer all of them and respond to any follow up questions with a minimum of machine learning tweaks

Yes, there are still a few folks who don't use digital devices but there are less of them DAILY (they died)

3/
And for those of you who have tried this Employment Killer AI, please just take the free 3 day trial and ask a few questions

The responses are plain language, very well written and almost always right!!

And you can ask the questions at 3:00 AM on Saturday night

4/
Read 4 tweets
Jan 4
Canadian House Prices in 2023:.Most Markets Grind Lower

Let's be clear: There is NO CANADIAN HOUSING MARKET

There's a bunch of regions with separate trends and conditions

But the math of high mortgage rates effects all of them

The highest priced feel the most pain

2/
GTA and GVA have the most to lose

Particularly Fraser Valley and distant GTA suburbs and satellite communities

The insane run up of 2021 prices have already given back almost all their gains in some cases 25% to 30%

Core cities much less decline

But there's more to come

3/
New listings were very low and Sellers were convinced that they could wait for a quick market recovery

Likely we will see a few forced sales from mortgage payment pressures and thousands of new Condos that have real trouble closing in the next 3 to 6 months

New Dynamic

4/
Read 5 tweets
Jan 3
Mortgage Math: The Killer Effect of Doubling Rates in Less Than 1 Year

It's quite popular today to see posts describing how Real Estate price drops in many Canadian markets offset the rise in Mortgage Rates

These posts are stupid and deceptive

2/
What sense does it make to use the absolutely insane February 2022 prices as a base case?

Sure those Batshit Crazy House Prices have fallen but it is not sensible to say because prices at the absolute peak are down 30% that it's all good now

Let's talk real numbers

3/
Simple Example $900K Townhouse 20% down payment = $720K mortgage requirement

Let's assume 30 yr amortization

July 2020 Rate 1.99% 5 yr Fixed = $3045 monthly payment + $440 monthly property tax and maybe $129 monthly condo fees = $3614 Total

It's about $600 more than rent

4/
Read 4 tweets

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