The market may still be slow – but there's plenty of ways to carve out business, says broker
A recovery of sorts may be in store for Canada’s mortgage market in 2024 – but with activity set to remain muted compared with the pandemic-era boom, the onus is still on mortgage brokers and agents to take a proactive approach that’s not solely reliant on sale and purchase activity coming through the door.
That’s according to Robert Jennings (pictured), a prominent St. John’s, Newfoundland-based broker with East Coast Mortgage Brokers, who told Canadian Mortgage Professional that his team had been focused on eking out business even in the typically slow opening month of the year.
“There’s a lot of uncertainty no matter who you are when you go from December to January – whether you’re a top-producing mortgage broker doing over $100 million or an average broker doing $5 million or $10 million, everybody has that uncertainty because everybody starts at zero [in the new year],” he said.
“There’s a lot of thought that goes through a broker’s mind in January because it’s naturally slow, the dog days of winter.”
What are top brokers focusing on in the current market?
With January representing a blank canvas of sorts for the mortgage broker community after the end-of-year borrower rush to get into a home in time for the holidays, Jennings said a key consideration for his team had been prioritizing other business including refinance, debt consolidation and remortgaging opportunities among clients.
That’s proven especially fruitful in the current market, he added, with a growing number of homeowners turning to mortgage brokers as the outlook – and their borrowing circumstances – grow increasingly complex.
“What we’re finding and what we found in 2023 is that most people are just choosing not to refinance if they don’t need to refinance to consolidate debt,” said Matthew O’Neil of Connolly Capital Mortgage Solutions.https://t.co/0J40brVNTG#mortgageindustry #industrytrends
— Canadian Mortgage Professional Magazine (@CMPmagazine) January 22, 2024
“A lot of existing homeowners are reaching out to mortgage brokers, and a lot of them have never used a mortgage broker before,” he said. “Having conversations with people that have never used a mortgage broker before is huge.
“I would argue that [brokers] have a smaller market share here in Newfoundland. If you have a smaller market share, that only means more opportunity,” he said. “We’re having a lot of conversations with loyal bank clients who because of these interest rates are no longer loyal.”
That volatile interest rate market, which has seen rates spike from the lows of the pandemic, means there’s now a large spread between the best and worst rates available to borrowers – opening up potential business for brokers who can recommend a variety of different options.
Time for brokers to show a clear value proposition in 2024
Amid a bumpy economy at present that may not ease until the second half of the year, now is the time for brokers to step up and show their clear value proposition over banks that are unable to offer as wide a range of solutions to clients, according to Jennings.
“The theme to [2024] is another year of volatility,” he said. “Sure, everyone’s saying rates are going to go down, but it’s not going to be a straight line, and you can’t control when your mortgage is going to come up for renewal.
“And you don’t buy a house for the rate – you buy a house for the house. So you’ve got to navigate through this and you’ve got to get those second opinions, third opinions, and talk about the pros and cons, and the mortgage term and the mortgage type.
“You just have to run more numbers, you have to provide more options, you have to give more advice to help people navigate through this environment. And when you do that, people trust you, people like you, and people want to deal with you. People refer their friends and colleagues to you.”
Even if purchase activity remains subdued until the Bank of Canada begins to trim interest rates – potentially in the spring or summer – there’s plenty that agents and brokers can be doing at present to make 2024 a productive year, Jennings said.
“In my opinion, there’s a lot to go around, and it’s all up for grabs,” he said. “There’s a ton of renewals, a ton of refinance opportunities – and we should be thinking about construction mortgages. We should be thinking about the spring market. We should be planting those seeds and having a proactive preapproval conversation so that you can wrap your arms around your client and hold their hands through a very difficult process.
“It’s going to be spring, whether you like it or not, [when] there’s going to be sales. There may not be as many and they may be a bit lower, but there’s still a ton out there, relatively speaking, for one person. You’ve just got to go get ‘em.”
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