Upcoming wave could give agents and brokers the chance to distinguish themselves further from the banks
With a huge wave of mortgages up for renewal between now and 2026, agents and brokers have a strong opportunity to grow market share and expand their business in the coming years, according to a top Toronto-based broker.
Leah Zlatkin (pictured), chief operating officer and broker at Mortgage Outlet, told Canadian Mortgage Professional that borrowers are likely to consider as wide a range of options as possible when renewing, opening the door for brokers to show their value and find new clients in 2024 and beyond.
“People, at least anecdotally, are finding that maybe the broker channel is going to offer them better options at renewal,” she said. “Maybe they’re going to have different options for refinancing. And I feel like we can certainly capture a much larger share of the market, especially when there are so many people up for renewal.”
The figures are stark: over two million mortgages are set to renew in 2024 and 2025, according to Canada Mortgage and Housing Corporation (CMHC), representing 45% of all outstanding mortgages in Canada – and an eye-watering figure of over $675 billion, or nearly 40% of the national gross domestic product (GDP).
The trend has also been fuelled by a growing number of Canadians who’ve taken shorter-term mortgages in recent years, a bid to lock in their interest rate while also keeping an eye on potential rate drops down the line.
“People will start to listen, and people are very interested in what’s going to be the most accurate information they can follow," says Scott Wittrup of Invis Mortgage Intelligence.https://t.co/FDeJP4hrZW#mortgageindustry #mortgagebroker #mortgageeducation #mortgageinsights
— Canadian Mortgage Professional Magazine (@CMPmagazine) January 9, 2024
What are brokers focusing on when it comes to mortgage renewals?
Top of mind when handling renewals in the coming year, according to Zlatkin, is a simple adage that rings true: no two clients are the same.
“I think the key is to treat every client individually,” she said. “Understand the client’s needs, and try and provide them the best solutions to meet those needs. One of the main challenges that I feel our competitors in the bank system have to deal with is that many of them don’t listen to the client.
“Many of them sell the product that they have – and they really only have their one offering, so they don’t care what the client has to say. They’re just going to sell them whatever they’ve got on the shelf.”
Brokers, on the other hand, can listen to a client’s needs and recommend many different options, or one that’s a better fit than the solution provided by the bank. For Zlatkin, offering that individualized advice is going to be a top focus in the broker space in 2024.
The likelihood of interest rate drops this year is another factor that could see borrowers return to the market in greater numbers than the past 12 months.
“I think this is going to be the year when listening and tailoring your approach to the client is going to win over everything else, every single time,” Zlatkin said. “Certainly, this year is also going to be the year when potentially we’re going to start seeing rates go down and as long as the bond yield continues down, we’re going to see fixed rates following that.
“So you need to win on service on quality, and you need to win on tailoring your solution to your client. And it doesn’t necessarily mean just, ‘Let’s get you a three-year fixed rate.’ It might mean, ‘You want to buy this rental property? Let’s refinance your existing property. Let’s take you to 30 years and get to a lower payment. Let’s make this more manageable for you. And then let’s free up some extra cash by doing X, Y, Z,’ and giving people solutions that meet their needs.”
Could refinancing see an upswing in the year ahead?
On the prospect of an uptick in refinances for 2024, Zlatkin said it depends largely on rates and how quickly they come down – but added that refinancing will be an option for some Canadians, particularly those who have consolidated debt.
Borrowers who may have “bitten off more than they can chew” on second mortgages and other means to get rental or investment properties, she said, could find an opportunity to refinance in the months ahead.
“In the next year, once rates have come down a little bit, it might be the right opportunity to refinance people who have gotten in seconds at private lenders or reached out for private financing,” she said.
“Nobody wants to be paying 9.5% long-term or 10% long-term and as we start seeing rates go down, obviously the stress test follows with that. And maybe somebody who wouldn’t have qualified this year might qualify next year because the stress test [may] drop by 25 basis points, and maybe they make the cut.”
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.
