Borrowers and brokers are gearing up for a more positive buying environment in the year ahead – but how busy will things get?
Weak economic data released last week seemingly gave the Bank of Canada the go-ahead to continue bringing interest rates lower – and with new rule changes aimed at boosting housing affordability on the way this month, is the stage set for a mortgage market surge in 2025?
That’s a key question facing mortgage professionals as consumer sentiment on housing continues to improve and RE/MAX Canada projects a brisker pace of homebuying in the year ahead.
Thirty-six per cent (36%) of Canadians are viewing the 2025 market with optimism, the real estate giant said, while prices are expected to rise by 5% nationally as most regions pivot back towards a seller’s market.
The Bank of Canada’s interest rate cuts to date, and the impending expansion of 30-year amortizations for first-time buyers, as well as a hike in the mortgage insurability cap, have strengthened the “tailwinds” currently at play in the industry, according to Pineapple Financial chief executive officer Shubha Dasgupta (pictured top).
“We’re seeing a lot of good progress on better affordability and [the Bank of Canada] working towards a neutral interest rate,” he told Canadian Mortgage Professional. “Secondary to that, we have consumer sentiment at a 30-month high right now which is great to see, as real estate is a very heavily sentiment-driven industry. When people feel good, they’re more active and they’re more ready in the market.”
Rule changes to play a positive role – but don’t expect a red-hot market
Starting December 15, Canadians purchasing a home for the first time will be able to amortize their mortgage for 30 years, up from the previous limit of 25, while the maximum home value eligible for an insured mortgage will jump from $1 million to $1.5 million.
Those changes will have a positive effect on the market, Dasgupta said, although he emphasized that brokers shouldn’t expect activity to shoot through the roof in the year ahead.
He underlined a cautiously optimistic outlook on prospects for 2025, anticipating a steady rather than spectacular pace of market growth and a stable level of activity in the 12 months ahead.
Unsurprisingly, another potent growth opportunity for brokers is expected to be renewals, with a wave of Canadians set to renew their mortgages in the coming years. Dasgupta pointed to another recent regulatory adjustment as a welcome boost for consumers facing that prospect. “There’s been this rule change of no stress test for uninsured switches, and it’s a really great time for us to make sure that we’re connecting with all existing Canadian homeowners,” he said.
“We’re addressing what options and what solutions might be best suited to them at this new moment in their mortgage lives, and how we might be able to play a role in helping them either save money or at least structure the debt properly.”
Which types of borrowers will take the mortgage market by storm next year?
A variety of different borrower types are expected to increase their market activity in 2025, he said, meaning brokers shouldn’t just focus on one client profile. Instead, casting their net far and wide gives the best opportunity for growth in the coming year. “We just want all of our brokers to understand that there’s not one specific area that they need to focus on, but a more holistic view is needed for the year ahead,” he said.
We’re seeing continued strong growth in our multi-unit insurance products.
— CMHC (@CMHC_ca) November 29, 2024
Insured volumes totalled nearly $48M for multi-unit insurance in the first three quarters of 2024— up 59% from the same period last year.
Get the full Q3 Report: https://t.co/p7AVKjRjqv pic.twitter.com/KyeKY6arBj
Another big trend that’s been strengthening recently: growth of multi-unit residential development, with real estate investors ramping up their interest in that space. “We’re seeing an influx of applications for that type of loan whether it be MLI Select, which is a CMHC product, or through other financing vehicles,” Dasgupta said.
“Investor appetite is beginning to come back – just in a different format and a different fashion. Brokers should keep that in mind and make sure that they’re talking to the right customers that might suit those product needs as well.”
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