Rocket execs talk growth in a challenging market – and bright prospects for the year ahead
After a transitional couple of years for Canada’s mortgage market, early signs are suggesting a resurgence could be in the cards for 2025.
Falling interest rates since the summer, and the likelihood of further Bank of Canada rate cuts ahead, have stirred consumer optimism for a better homebuying environment next year.
And while plenty of businesses have continued eking out opportunity in 2024, confidence is growing that the progress seen in recent months won’t be a flash in the pan.
At Rocket Mortgage Canada, strong growth throughout the year despite a bumpy market outlook has set the company in good stead for a busy 2025, according to top executives.
Hash Aboulhosn (pictured), the company’s president, told Canadian Mortgage Professional that encouraging progress had arrived on both the broker and direct-to-consumer side.
A big year in the direct-to-consumer channel, meanwhile, has seen significant year-over-year growth in recent months, reflecting what Aboulhosn described as improving prospects for the mortgage market looking forward. “I feel like 2023 really had a headwind in January,” he said. “We’ve been operating under this headwind for so long – better, faster, leaner – and now that’s turned into a tailwind, with rates coming down.
“We see it with clients responding to our leads, more clients coming in, more interest, better conversion. So we’re starting to see the very early signs of it and we’re seeing the numbers. It’s been really good.”
Growth in a turbulent market
The company made a splash in May by entering the third-party broker market with Rocket Pro, which continues to add new brokerages. A key takeaway from that rollout, according to Brendan Woodfull, divisional vice president, sales (wholesale) and principal broker, has been brokers’ focus on as quick and efficient a mortgage process as possible. “Brokers love speed, and that’s really our thing: getting approvals done quickly, getting the broker complete quickly,” he told CMP.
“In any environment, we all want to be able to deliver that service. So we’ve been able to do that so far, and I think we’re going to be able to continue to do that.”
#IndustryReacts: After significant interest rate hikes in 2022 and 2023, Canadians are adjusting to falling rates, though the impact on housing and mortgage markets remains unclear.
— Canadian Mortgage Professional Magazine (@CMPmagazine) November 1, 2024
Read more: https://t.co/G3jRR3D93u
A series of interest rate hikes by the Bank of Canada in 2022 and 2023 raised its benchmark rate to a 23-year high of 5.0%, seeing borrower preferences surge toward fixed rates as variable rates continued to spike.
But the central bank has trimmed that trendsetting interest rate by 125 basis points in four successive cuts since June, a trend that Woodfull said is seeing variable rates emerge once again as a viable option for mortgage borrowers. “We’ve seen a shift very recently in terms of our submissions being a lot more variable rate compared to fixed,” he said.
“It feels like a lot of brokers were shying away from variable and now we’re starting to see it shift back. People are going into variable knowing that they can always flip into a fixed [later].”
What would more Bank of Canada cuts mean for the mortgage market?
With the Bank of Canada making no secret of its intention to continue slashing rates in the coming months, the swing back towards variable rates is one that could stretch into 2025, Woodfull said. “I think it’ll happen into probably early- to mid-next year,” he said. “You’re going to see people put into a variable rate and then I think brokers are going to follow those clients closely and then try to flip them into a fixed at some point.”
The central bank’s last cut was an oversized one – the first time it’s reduced interest rates by more than 25 basis points in a single move since the beginning of the COVID-19 pandemic.
With its next decision scheduled for December 11, the prospect of another bigger-than-usual cut loomed into view after Statistics Canada revealed the economy stalled in August and likely saw only slight growth in September.
Projected overall growth of 1% in the third quarter is lower than the Bank of Canada’s forecast – and means another 50-basis-point cut in December is probably on the way, according to RBC economist Claire Fan.
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