A milder market is expected to continue through much of Q1
Mortgage agents and brokers are gearing up for the year ahead with much cause for optimism, seeing possible interest rate cuts and a busier market on the horizon.
It’s no secret that 2023 was, at best, a mixed year on the mortgage front, with spiking rates helping cool would-be buyers’ interest in entering the housing market and presenting a fresh set of challenges for scores of homeowners.
Barring a dramatic turn of events, it currently seems a question of when rather than if the Bank of Canada will slash rates in 2024, with Governor Tiff Macklem directly addressing the likelihood of cuts in a December interview.
“I think it is sometime this year,” Macklem told BNN Bloomberg when asked on the timeline he envisages for rates to start falling.
That said, with variable rates still hovering around their highest levels for decades – and little indication that the Bank will cut early and deeply – the prospect of an imminent upswing in Canada’s housing and mortgage markets seems a distant one for now.
For mortgage professionals, that’s likely to mean the early part of 2024 will be much the same as last year, marked by mild purchase activity and the need to eke out business opportunities by taking the initiative and picking up the phone.
John Vo (pictured top), broker at the Dartmouth, Nova Scotia-based Spicer Vo Mortgage, told Canadian Mortgage Professional that agents and brokers throughout the country would already be well accustomed to that approach, having shifted focus as the market cooled at the onset of rate hikes.
“It’s a cliché, but I think we all have to be a little bit more proactive now,” he said in December. “There was a point in time where everybody wanted to buy a home because of one reason or another: the COVID effect, the low rates, and people being at home and people having money to spend.”
During that time, Vo said, while brokers continued to market themselves heavily, “it wasn’t as [important] to be creative or aggressive as we do today,” he said. “This is being proactive. This is very important.”
How can mortgage brokers bring success to their businesses this year?
What that proactivity will entail for 2024 differs depending on the style and preferences of the mortgage professional, according to Vo.
“It’s really not a one-size-fits-all, because some people really like to double down on social media,” he said. “Some people like to do old-school mailing. Sometimes people like to do presentations. So whatever it is that you feel comfortable with is great – but basically, be proactive.
“Make those calls, do those presentations. Work on the advertisements and so on. It’s hard to do sometimes: it’s supposed to come as natural when you’re just trying to stay afloat and trying to breathe. But now, shifting a little bit to say: ‘OK, I’ve got a little bit of time. Instead of packing it in for the day, let’s be a little bit more proactive.’ I think it’s a hard habit to get into, but once you get into it, it’s kind of like going to the gym. It becomes natural.”
While eventual rate cuts are expected to be cautious, with the Bank of Canada undoubtedly mindful of the dangers of lighting a fire under the national housing market again, Vo noted that a “slow and steady” approach would still be good for consumer confidence and the feeling that the worst has passed for rates.
What’s next for Canada home prices?
Home prices are expected to slide slightly in the first half of this year, according to TD, although a recent Royal LePage report indicated they were likely to surge again by the end of the year.
Vo said a dip in home prices would be welcome news for many borrowers based in Halifax, with affordability issues growing amid climbing property values and lack of supply.
Royal LePage is expecting potential reductions in the Bank of Canada’s interest rate to propel a 5.5% annual increase in the national aggregate home price during the final quarter of 2024.https://t.co/aryVtVk1KQ#mortgagenews #interestrates #housingmarket #houseprices
— Canadian Mortgage Professional Magazine (@CMPmagazine) January 4, 2024
“We’re getting to a point where average, moderate incomes can’t really afford a home on their own,” he said. “So they’re needing co-signers or they’re needing help from family for down payments or different things like that. So I do hope to see the prices come down a little bit so that more people can enter.”
Another factor set to be keenly watched by brokers and agents, as ever, is government action on the housing file and whether 2024 will see meaningful progress on boosting supply and affordability.
“Will they relax policies at all? Will they help things out so that more affordable houses can be built? I hope some things can be done on the government level,” Vo said. “Typically, it’s slow-moving when they do – but at least it’s good for consumer confidence.”
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
