"What has worked in the low interest rate environment isn't going to be sustainable"
The Bank of Canada has announced that, barring extreme economic data, it is planning to keep its benchmark policy rate at 4.5% for the foreseeable future — a level that will spell difficulty for a considerable amount of borrowers, according to Rachel Oliver, co-founder and managing partner of Clover Properties.
“The first reality check is that what has worked in the low interest rate environment isn’t going to be sustainable going into this high interest rate environment and staying here,” Oliver said in a recent episode of CMP TV.
This was especially apparent in market activity levels.
“Brokers are saying that their conversion rates have gone from 70% down to 40%, which is a real challenge,” Oliver said. “So this is where you have to consider what has worked in the past and how it is going to evolve.”
Many brokers have been looking at A-, B-, and private lending for solutions, but Oliver suggested one less frequently considered channel: rent-to-own financing.
“Rent-to-own financing has been around in Canada for over a decade, so expanding the periphery to include rental and financing as a solution would be probably the number one advice that I would offer and educating yourself on how it works,” Oliver said. “Ask a lot of smart questions so that you can then present these opportunities to your clients and solve more problems than any other brokers are solving.”
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