"What we've been seeing a lot of this year is a much better quality of borrower"
The Bank of Canada’s unprecedented series of outsized interest rate increases during much of 2022 was a source of much volatility in the mortgage space, but it also brought with it an unexpected side benefit.
“What we’ve been seeing a lot of this year is a much better quality of borrower because [of] rates escalating so quickly and with the stress test still not moving,” said Nick Kyprianou, president and CEO at RiverRock Mortgage Investment Corporation.
“We’re seeing a quality of borrower that’s been much better than we’ve seen historically. People have good incomes, good credit, good everything; it’s just that they’re just missing the mark on the GDS/TDS qualifications because of stress testing. So our quality of borrower has been increasing quite substantially this year, which has been great for us.”
This trend only amplifies the importance of the mortgage professional who asks the right questions, Kyprianou stressed.
“Make sure you totally understand your client’s situation with respect to their income, their ability to prove their income, their credit and things of that nature,” the CEO said. “Because what happens a lot is the brokers will quote the best rate on the street and then fail to ask, [fail to] run the credit report or ask questions about their income. So then all of a sudden [the broker says], ‘I can get you this.’ And [the client goes], ‘But you told me this.’ And so then they’ve lost them.”
For more insights on what 2023 could bring for the mortgage industry, click here.
