Top brokers have their say on the current market, how the profession must evolve, and much more
Four of Canada’s top mortgage professionals took the stage at Day 1 of MortgageFest Canada to deliver an unfiltered assessment of where the market is headed – and how mortgage brokers can stay relevant and keep ahead in an increasingly hostile environment.
Prominent brokers Ron Butler (pictured top, middle left) of Butler Mortgage, Tracy Valko (pictured top, middle right) of DLC AMI Mortgage Collective Group, Vince Gaetano (pictured top, far right) of OwlMortgage.ca, and moderator Frances Hinojosa (pictured top, far left) of Tribe Financial pulled no punches in a closing panel discussion that touched on rising bond yields, aggressive bank renewal tactics, and – colourfully – the limits of artificial intelligence.
The rate environment has grabbed headlines in recent weeks, with bond yields moving higher in a stark indication that fixed rates are also on the way up. Butler, who sees more Bank of Canada rate hikes on the horizon before the end of the year, said the pattern that follows any rate increase is a “valley of death”: an initial flurry of clients rushing to rate holds followed by a halt in activity as higher borrowing costs sink in.
As for home prices? He sees values continuing to fall before stabilizing at some point late next year. “When prices stop falling, they don’t immediately start going up. They stay flat for a while,” he said. “They just bounce around a little bit.”
Bond market trends and why brokers should follow them
South of the border, the Federal Reserve recently hiked interest rates, with that decision directly impacting Canadian fixed-rate pricing. Valko said understanding how bond market fluctuations affect the mortgage and housing outlook is simply not optional for brokers.
“You need to have that as the number one essential thing when you’re talking to your clients and your referral partners,” she said, “because it’s the only thing that’s going to help you navigate solutions for clients right now. And we know that narrative is continuously changing by the hour.”
Unsurprisingly, artificial intelligence (AI) also emerged as a prominent talking point, but Butler doesn’t see it having a dramatic impact on the industry in the years ahead – to put it mildly. “F*** AI… Forget it. It’s not going to change the mortgage business,” he said.
But Gaetano said the role of a mortgage broker still needs to evolve amid a constantly shifting economic backdrop. “We’ve got to go from being a gas station attendant to being a doctor,” he said.
“It’s no longer driving up, asking whether you want leaded or unleaded, and give them a five-year rate and see them in five years. You’ve got to evaluate what the client’s going through, what they’ve experienced, and what their household’s like.”
A troubling trend he’s seeing play out in the Greater Toronto Area (GTA): some clients who have owned their homes for 10 or 15 years now owe more today than they paid for them, not because of major renovations but because of lifestyle creep.
With property values declining and prime lending increasingly difficult to access, many are moving from prime into alternative and private solutions.
Value of mortgage brokers remains undimmed
The uber-attentive approach of banks to renewals was also a prominent topic of discussion. Some banking giants are aggressively early-renewing clients six to nine months out, often before brokers even know a renewal is approaching.
But an increasingly fraught outlook for mortgage borrowers and homeowners is also putting the value of brokers into clear focus, according to Valko. “One out of two Canadians are $200 away from not meeting their financial obligations,” she said.
“The numbers are there. You guys just need to pick up the phone and call the client. It’s not AI – it’s actually having calls.”
Another way for brokers to ride out the current storm and set themselves up for success in the current market cycle, according to Butler, is identifying a niche. “You have to have a specialty,” he said. “If you’re going to be an infinite generalist, you’re doomed.”
Plenty more is in store for Day 2 – be sure to attend what’s already been one of the biggest events in the Canadian mortgage industry calendar this year.
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