How Canada’s mortgage market has handled the renewal wave

[00:00] We had a road map at the beginning of the year of tools that would take about two to three years to get done. We got them all done last month. How many brokers in here are doing TikToks and they're actually seeing a benefit from it? I think everyone got really worried about it so they got really good at preparing for it. The renewal cliff doesn't exist to the extreme. We're not going to just talk about mortgages. We're going to talk about everything.

[00:32] Fergal McAlinden: Now, so we are back with Grant Armstrong, Chief Growth Officer at Wealth One Bank of Canada. As we were saying, Grant, really busy start to the year for everybody. It's been a, well, not start to the year, it's been an interesting year for everyone. Talk about your message to brokers today. There are plenty of them here. What are you guys talking about?

[00:51] Grant Armstrong: Yeah, the biggest thing we're trying to do is explain to brokers who we are. Wealth One Bank is actually Canada's fastest growing bank. So what we want to be able to do is understand what our message is, what we're focusing on, our goals, how we can help the industry, how we can partner with brokers better, but also just why we're different.

[01:08] I mean, it's incredible. The number of organizations that are here today. I do remember the very first event about four years ago and it would fit maybe two rows. You've sold out an incredible location here. So, we want to tell people why we're different, why we believe in them, what we're trying to help them with, and go forward from there.

[01:26] Fergal McAlinden: It always strikes me that for events like this, one of the biggest advantages for both brokers and lenders is that you get a chance to talk to each other about maybe some of the pain points, things that are going well, things that are going badly. Is there anything that you commonly see with brokers or agents that you think you'd like to get the message out that needs to be different or that maybe they're not doing that they should be doing at the moment?

[01:45] Grant Armstrong: Yeah, I think this is a great opportunity to sit down with brokers and talk to them about what they're doing, but we're doing it a little differently. We're trying to understand what their pain points are. And the biggest pain points that we're hearing from brokers is the ever-changing policies, the ever-changing rules, the ever-changing processes that lenders are introducing.

[02:03] Every lender in the room is just trying to be more efficient, more productive. So every single week a lender has changed how you submit a deal, what forms you need, what documents. Brokers are struggling to keep up with that information. So what we're trying to do is actually, we did all of our changes earlier this year and we're actually trying to tell everyone we're status quo.

[02:23] All the changes that we're doing are back-end changes, but they get to see the benefit. So we brought in AI, for example. We're using AI to build tools. We had a road map at the beginning of the year of tools that would take about two to three years to get done, and we got them all done last month.

[02:38] So that's what we're doing on the back end. We want to hear what their pain points are, make sure they know that we're changing what we do in the back, but it's not impacting them except for all the positive sides of that.

[02:48] The other part is we're trying to get people to understand the credit environment. Between regulators, between people south of the border, between wars, it all impacts mortgage interest rates, it all impacts process, it all impacts risk. So how, as a lender, as a Schedule I bank, are we interpreting that and how are we putting it back out there? Those are the conversations we're having.

[03:12] Fergal McAlinden: It's interesting you mention that. You and I have been talking over the years, probably starting around COVID time. We had record low interest rates, we had economic turmoil, all that. Then we moved into rate spikes. There was talk about the renewal cliff and all that kind of thing. Then we have all the geopolitical tensions that we've seen over the past couple of years, condo challenges and more.

[03:32] What about the market for 2026? How are you viewing it? And anything you're keeping in mind navigating the current outlook?

[03:38] Grant Armstrong: I'm going to sound like a broken record. I've been saying this for four years. The markets are good. And what I love about what brokers have done is they've diversified.

[03:47] A lot of people say, "Oh, the market's slow." No. Purchase transactions are slow in some areas, but refinancing, switching, consolidating, improvements, investor opportunities, there are brokers I was talking to the other day that have paired up with wealth management organizations to be able to help people fund investments and fund savings.

[04:04] So the diversity of what brokers are doing has kind of negated the market trends. Ten or fifteen years ago you could see seasonality. That's gone. It's now an opportunity that sits 60, 90, 120 days in front of you. So lenders that can actually adapt to that change and keep their processes, policies, and marketing top of mind are benefiting from that.

[04:28] The other conversation I had a long chat about yesterday was brokers getting much more into marketing. It used to be business groups, handshakes, and realtors. But social media. I mean, how many brokers in here are doing TikToks and they're actually seeing a benefit from it?

[04:43] So, I think 2026 is going to end on a high. Not to dampen the market, I think rates will probably go up in October. I think the governor basically alluded to that without alluding to it the other day. We'll see shifts.

[04:56] But what you can also see on the fixed-rate side of the market is they've already been going up. GIC rates are up 35 points in the last 60 to 90 days. Bond rates are up 60 points. Everything's been going up already. It's just a natural part of the market.

[05:12] Fergal McAlinden: What about when it comes to the renewal? We've talked about that so much over the past few years. We were all looking to the cliff that we talked about in 2025 and 2026. Do you get the impression that it's been more manageable than we maybe thought a couple of years back, or what's your look on that one?

[05:26] Grant Armstrong: I think it was a war cry. I think what it was is, we're going to anchor around this. The reality is 20% to 40% of mortgages renew every two years. That's just the reality. Shorter terms have driven that number up.

[05:40] I think everyone got really worried about it, so they got really good at preparing for it. And I think that preparation has taken the noise out of it. The big renewal cliff was in 2021 when rates were around 1.99% to 2.49% and then in a year or two they were renewing at 6% to 7%.

[05:58] That was the renewal cliff. That happened to alternative lenders, private lenders, and others. But prime lenders took three- and five-year terms. They skipped it. So they were able to start renewing again as rates started to come down.

[06:10] We're in normal rates today. We're not in obscenely high rates. We're in normal rates. So I think the renewal cliff doesn't exist to the extreme, but it's something we need to be aware of.

[06:21] And the stress test, as much as many people don't love it, worked. Every customer was qualified at at least 5.25%. Rates are below 5.25%, so they should be able to handle it.

[06:32] Fergal McAlinden: Yeah. The stress test, I feel, is always the one regulatory thing that a lot of brokers pointed to and said this should go or it served its purpose. But its purpose was to do what it did, I guess, and it really helped.

[06:45] Grant Armstrong: It's a barrier, don't get me wrong. The stress test does limit some deals, but it's necessary. It constrained people from going out too far. Some of those customers that didn't have a stress test, when rates were 1.99%, would be getting three- and four-million-dollar mortgages. They'd be in a lot of trouble now. So it's a necessary tool that was required.

[07:05] Fergal McAlinden: Sure. Okay, so Wealth One. Anything that you're really excited to share today? Anything coming down the line that we should be keeping an eye on?

[07:12] Grant Armstrong: Wealth One is advancing beyond just being a mortgage lender. Last week we actually did a massive campaign in Toronto. We're helping Canadians save. We have Canada's highest-rate non-promotional savings account. We're helping Canadians on both sides of that balance sheet.

[07:28] I don't want to give too much away, but we've got a few more enhancements on those products. We also want to see how we can help brokers be much more involved in that. I think brokers have this incredible opportunity to sit in front of customers.

[07:41] It started with mortgages. Creditor insurance came out a couple of years after that, and it hasn't really crossed into other product lines. I want to see how we can actually position brokers as that adviser to the customer and give them more tools, more products in front of them.

[07:55] So we have a number of changes that are going to amplify our business on both sides of the balance sheet, but we want to be able to have that conversation with brokers about both sides. That's the big change you're going to see with us. We're not going to just talk about mortgages. We're going to talk about everything and really make sure that brokers are advised on everything they need to give customers.

[08:10] Fergal McAlinden: Okay, perfect. Last question, Grant, before I let you go. You've been at a few of these events. You were here when it was the Mortgage Summit. Now we're at Mortgage Fest. What's your impression of the event so far?

[08:19] Grant Armstrong: Oh, it's incredible. I was talking to somebody. Four years ago, when you planned it, there were maybe 230 people that might make it, and it was almost a thousand. This is a must-see event.

[08:33] If you're a broker and you want to talk to lenders, you want to talk to other people, you want to hear great speakers, you want to get insights, this is the place you need to be. And as a lender, I wouldn't be anywhere else.

[08:45] I congratulate you guys and the team. You had a mission four years ago. You gave me an opportunity to be part of that four years ago. I was on stage at your first one. I'm happy to look forward to the next 10 or 20 that you do and be there and support each one of them.

[09:01] Fergal McAlinden: Great stuff. Well, we're looking forward to seeing what's next from you guys from Wealth One and seeing what's in store for the rest of the year. So, thank you very much.

[09:08] Grant Armstrong: Thanks, guys.