It’s been a turbulent opening to the year, but there’s still plenty of opportunity – and trends for brokers to stay aware of, according to execs at the recent Canadian Mortgage Summit Vancouver
Familiar challenges continue to engulf Canada’s housing and mortgage markets, from economic uncertainty brought about by trade turmoil and war in the Middle East to affordability struggles and renewal pain.
But there’s also cause for optimism in the current landscape, executives stressed at last week’s Canadian Mortgage Summit Vancouver, as borrowers show resilience navigating a choppy environment – and even find some opportunity in the purchase market.
Much has been made of the so-called mortgage renewal wave that’s been at play since last year: a huge number of homeowners renewing their mortgages at significantly higher interest rates than they took out when the mortgage was originated.
While that trend still shows no sign of fading – and Canada’s banking superintendent has flagged the risk it still poses – borrowers currently appear to be managing payment strain and coping with steeper payments.
“What we’ve seen and what we continue to see is that borrowers are really resilient,” Kristina Morrison (pictured, top left), director, regional sales for British Columbia at First National Financial, told an audience at the Summit, which welcomed hundreds of Western Canada-based mortgage professionals on March 19.
“I think we’re seeing that through the delinquency rates. In Alberta, they’re at an all-time low, and BC only had a slight increase.”
Indeed, a recent Canada Mortgage and Housing Corporation (CMHC) report showed major markets in the Prairies and BC trail well behind Ontario as the most at-risk areas for mortgage arrears, although Calgary’s risk is described as “moderate” with Edmonton also vulnerable.
First-time homebuyers step back into the market
On the purchase side, meanwhile, it’s no secret that activity has been muted across most regions since the red-hot market of the COVID-19 pandemic – a product of higher interest rates and growing economic unease in recent years.
But there’s been a silver lining to that trend, too: while competition has declined, that’s opened doors for some first-time homebuyers who hoped to buy but found themselves priced out of the market because of bidding wars and soaring prices.
“Although there’s a lot of uncertainty, I think we’ve seen a large shift of first-time buyers really coming back and embracing the market,” Morrison said.
“BC saw an increase in the insured market share, which is hard with our prices. And I think that’s just showing that the first-time buyers are feeling like they can get into the market.”
Brokers, take note: buyer preferences and solutions are shifting
That swing in favour of buyers is a welcome change for shoppers who haven’t seen much opportunity over the past five to six years, according to National Bank Optimum Mortgage director, national sales and marketing Imran Thaver (pictured, top right).
He noted another new aspect of the current market: while previously, buyers and borrowers mainly prioritized the lowest interest rate they could secure, that’s no longer the biggest – or only – consideration for plenty.
“It truly is a buyer’s market now. And that’s really shifting what our customers and our borrowers are now expecting of us in the market,” he said. “I think the other thing… is the borrower-mindset shift.
“In the past, everything was about rate. And if we take a look today, I think it’s more focused around payment flexibility and actual pragmatics, just around more of a payment-focused borrower.”
He sees that trend having big implications for brokers, particularly when it comes to the type of mortgage solution they’re recommending to clients.
“Are we putting our borrowers in the right mortgage product today? It’s more important than it’s ever been, and I think that’s something that we really need to think about as we move forward,” he said.
“It’s not just a rate conversation anymore. I think the brokers that are really going to succeed are going to focus on what’s in it for the borrower and really doing a good job of understanding their money.”
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