Private lending is on the rise, while conventional products are slowing down
The Bank of Canada’s outsized interest rate hikes are beginning to affect mortgage market activity, according to industry players.
Leah Zlatkin, of LowestRates.ca, told the Financial Post that over the past 12 months or so, she has observed a significant number of workers involved in the gig economy who are moving towards private lenders for their mortgage needs.
“The last year has been a huge wave – a tsunami even – of mortgages and files coming through our desks, and right now we’re sort of at the place… where the big wave has hit and we’re sort of in the foam,” Zlatkin said.
Conversely, borrowers who are gravitating towards more conventional mortgage products have slowed down their searches.
“A lot of people are just sort of waiting it out; want to see what’s going to happen with the next rate hike before they jump in,” Zlatkin said. “The question is: how long do you wait? How do you know when we’re at the bottom? And what is the best opportunity for you? And can you accommodate some risk? That’s sort of where our clients are sitting right now and what they’re considering.”
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David Larock, of Mortgage Planners Inc., said that the impacts of the aggressive hikes vary considerably between refinances and new purchases.
“Typically, up until very recently, about half of the business I was getting was refinances and half was purchases – and of course, both have been impacted by higher rates,” Larock said. “But… I would say the most significant impact thus far I’ve seen has been on refinances… The only people refinancing today are the people who really need to.”
“I would say the refinance business over the near-term has effectively dried up … a little bit, but not much.”
