The shifting 2022 landscape has seen plenty of new developments in the mortgage space
As a year that’s witnessed a pronounced shift in Canada’s mortgage market draws to a close, a packed audience of mortgage professionals had the opportunity last week to hear from some of the country’s leading lenders on the main trends they’ve been noticing in the space.
Appearing on a panel at the Canadian Mortgage Summit in Mississauga, prominent figures on the industry’s lending side addressed the changing market and some of the top developments through their eyes.
One issue for lenders and brokers alike at present appears to be the fact that some borrowers can have an outdated view of where interest rates actually lie – failing to account for the fact that they have risen significantly throughout the year amid a flurry of hikes from the Bank of Canada and lending institutions.
Differing expectations mean it’s doubly important for brokers and agents to take the time to ensure their clients are fully apprised of the type of rates they can expect in today’s market, according to Community Trust national director of sales and lending Grant Armstrong (pictured top) who took part in the panel.
“That’s the challenge – have that conversation pre-sell,” he said. “Explain to them there might be a lender fee. Explain to them there might be a broker fee. Pre-sell the deal, get them on board.
“That’s the first trend we’re seeing – clients that are still expecting prime minus a hundred and something, or a 2.59% rate and no fees. It’s not today’s market, so educate them.”
How has the changing market impacted consumers?
Unsurprisingly, an evolving market environment that’s made it increasingly difficult for borrowers to secure approval also means that a smaller number of would-be clients are now straightforward cases, according to Armstrong.
“We’re seeing a lot more complicated transactions. Take the time to interview your clients,” he advised brokers in attendance. “I remember the days where a million-dollar deal was like a unicorn. Now, it’s the average price point on a mortgage [in Toronto].
“Invest the time to get to know your client, because I guarantee that transaction – when you know your client – is easy, it’s simple, and you can fight for them. And the lender understands it. Take that time, get to know the client, talk to the BDM to find out what’s important.”
What other trends are lenders noticing?
Leanne Conroy (pictured below), business development manager at MCAN Mortgage, noted the growing trend of families deciding to stay together in a single property for a variety of reasons.
“It’s happening now. It allows parents, people to age in ways that allows [them] to save on daycare and allows people to afford to live in a home as opposed to rent,” she said. “So that’s what we’re seeing on the rise.
“That’s why having flexible solutions on the alternative [is important]… Make the deal work so that your clients can stay together and be in a home.”
Calgary has seen a mini-boom in homes expressly built for multigenerational living, driven largely by the Indian community. https://t.co/d2jwTk9k5k— CBC News (@CBCNews) November 3, 2022
On the private side, Sach Aul, business development manager at 8Twelve Capital (pictured below) said that not a lot of renewals are currently happening. “A lot of the times, those deals that you’ve done are a much higher loan-to-value, so it’s a bit more difficult to help get them into a different private to buy them out,” he said.
First purchases have slowed down, he added, because many clients aren’t taking the time to contact agents and brokers to get a briefing on what they should buy before they go for it. “Appraisals are coming in a lot less than what we have experienced – 20% to 30% sometimes – and you’re asking for 80% of the appraised value when we know [they] should be doing it on the purchase price,” he said. “So a lot of those deals are falling apart on the private side as well.”
A worrying trend is the lack of budgeting currently at play among Canadians, noted MCAP’s director of sales Sushanta Sen (pictured below), with bodies including the Financial Consumer Agency of Canada having indicated their desire to strengthen financial literacy and awareness among the general public.
Another feature of the market at present, he said, is that many prime borrowers who qualified on the A side had now reverted to B or C – while a large cohort of would-be buyers have hit pause on their borrowing plans in the current volatile environment.
“There’s a trend that many people are sitting on the sidelines waiting for this market to drop where they are going to be buying a property far cheaper than it [currently] is,” he said. “By the way, that adjustment is already happening, depending on which area of the GTA or GVA or Ontario you are, you may have already experienced a drop.”
What trends are you noticing at play in the current market? Let us know in the comments below.