Broker share and alt-lending prominence set to continue growing
It may be difficult to believe, but the end of a rollercoaster year for the mortgage market is coming into sight – and brokers and lenders are already turning their attention to what’s in store for 2025.
Persistently high borrowing costs throughout much of 2024 have weighed against homebuying and refinance activity across Canada, although a recent glimmer of hope has arrived thanks to Bank of Canada rate cuts and falling rates on the fixed side.
At last week’s Canadian Mortgage Summit in Brampton, top alternative lending executives discussed the year that’s been and their thoughts on the 2025 outlook – and while there remain plenty of bumps in the road, it’s clear that also means opportunity for mortgage professionals to step forward and show value.
Taylor Lewis (pictured, top left), AVP, originations and strategic partnerships at Canadian Mortgages Inc. (CMI), spoke to that reality. “I think some of the main challenges are, like any changing market or environment, the unpredictability of the market and the buyer psychology,” he said.
“But that does come with opportunity. So any time there’s any sort of unpredictability it allows us as lenders to be a little creative and come up with more products, with more solutions for the borrowers and for the brokers.”
For Elena Robinson (pictured, top centre left), vice president of residential sales at First National Financial, the current outlook is one of “cautious optimism” about an impending market turn for the better.
That’s due in part to recent rule changes that have eased qualification criteria for borrowers hoping to secure a mortgage, as well as a general sense that falling rates appear to be convincing prospective buyers to step back into the market. “I think the feeling with individuals is that they’re really starting to get off the fence,” she said, “and I think that’s going to indicate 2025 is going to be a much better year.”
Affordability to remain a challenge in 2025
Of course, the market’s current sluggishness could have a while to run yet, particularly with rates remaining high and affordability still out of reach for many buyers in specific markets.
While Reaza Ali (pictured, top centre right), national broker relations manager at Fisgard Asset Management, noted plenty of opportunity heading into next year, he also acknowledged those hurdles for borrowers – not least in the country’s priciest markets. “When we look at our side of the business especially, we look at consumer affordability and I think that might be a common theme still, going into 2025, with the economics that surround us,” he said.
Experts predict that Canadian homebuyers may struggle for a decade to return to an affordable housing market due to high prices and stagnant spending power.https://t.co/4xj9YY3cbx
— Canadian Mortgage Professional Magazine (@CMPmagazine) October 1, 2024
The direction of property values remains difficult to gauge in many markets. “We don’t really know where they’re going yet,” Ali said. “Regions across all provinces vary dramatically. So I see that as still being a bit of a challenge – but when we talk opportunity, I know broker shops that started in 2008 and 2009 after the big crash and they’re still around thriving. So it’s never a bad time to really start, it’s just [a question of] what kind of activities you’re choosing to set yourself up for as we get into 2025.”
What’s in store for broker share and the alt-lending space?
Affordability challenges may be coming into sharp focus in the current high-rate environment, but they’re by no means a new phenomenon, pointed out Equitable Bank director, residential sales Prakash Bector (pictured, top right). He said “immense” regulatory changes that have taken place over the past 15 years, from insurable rule changes to stress test guidelines, have made the mortgage financing landscape extremely complicated at present, but noted the chance for brokers to shine in those circumstances.
Broker market share is climbing year over year “and it will continue to grow,” Bector said. “Consumers need your advice. They need the advice of experts in this ever-changing landscape, and I think that’s a huge opportunity.”
Robinson also underlined the important role alternative lenders were playing in the current market as conventional lending institutions tighten their criteria and take a more conservative approach. Brokers, she said, should be paying as much attention to the alternative space as possible. “We have to acknowledge the fact that this has grown to a $60 billion industry,” she said.
“I know a lot of brokers feel the alternative space is challenging [but] it’s a great opportunity for brokers to actually get familiar with the alternative space. Reach out to your lender partners – there’s always all types of education training to get really involved. I think it’s very important.”
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