Bank CEO talks market prospects looking ahead
Canada’s mortgage market may not be roaring just yet – but expectations of a continued drop in interest rates and an uptick in homebuying activity have spurred hopes that better times are on the way.
Even ahead of tomorrow’s rate decision by the Bank of Canada, which is expected to see the central bank introduce a third consecutive cut to its policy rate, some green shoots have been appearing on the housing front.
Andrew Moor (pictured top), chief executive officer at Equitable Bank, told Canadian Mortgage Professional his conversations with brokers had revealed an unusual upswing in overall market activity at the end of August – a cause for optimism, even if it doesn’t necessarily signal a surge just yet. “The last couple of weeks have been encouraging in terms of mortgage submissions, which is great,” he told Canadian Mortgage Professional.
“I’m a bit careful about extrapolating that throughout the year, but to see increased volumes in the last two weeks of August is not what I totally expect, either. Hopefully the Bank of Canada moves down another quarter-point [on September 4] – that will start to stimulate more activity and we can all sort of get back to a more normal cadence.”
How soon is the housing market likely to take off?
While July housing data suggested buyers had yet to flock back to the market following the Bank’s first rate cut, Canadian Real Estate Association (CREA) senior economist Shaun Cathcart said in remarks accompanying its release that a hotter market in 2025 “[had] just gone from a layup to a slam dunk” thanks to the near certainty of lower rates down the line.
A continued fall in rates, Moor said, could help unlock some of the demand that’s been building in the recent challenging purchase environment. “There’s definitely got to be pent-up demand in the market,” he said. “There haven’t been that many transactions. [There have] got to be all sorts of people out there – with another child, wanting another bedroom, and haven’t chosen to move house because of the mortgage rates or whatever.
“So when the conditions become right, we’ve got to believe that business comes back to more normal situations. I think it’s those brokers today, those lenders today, that are gearing up for that, thinking about how that’s going to evolve, that are going to be successful.”
Even though the current subdued market may have a while to run yet, Moor said mortgage professionals should be well into the practice of ramping up their systems to be ready when a steady stream of business returns.
Now’s the time, he said, “to be looking for the business, organizing, making sure you can handle the capacity – because I think six months from now, we’re going to be having very different conversations.
“Whether it’s going to change the next month or two is another question. But I certainly think that by spring next year… it’ll be showing up to be a pretty good spring market in 2025.”
Another solid quarter for Equitable in Q3
Moor was speaking with CMP shortly after Equitable reported strong earnings for 2024’s third quarter, with revenue rising 3% compared with Q2 and jumping 15% over the same time last year.
Adjusted net income in Q2 came in at $117.2 million, a 6% quarter-over-quarter increase, while total assets under management and administration were up 16% from Q3 2023 – hitting $125.4 billion.
Decumulation lending assets, which include reverse mortgages and insurance lending, recorded a 56% annual increase, and ticked upwards by 11% compared with the previous quarter.
Moor said the support of the broker channel had helped fuel the bank’s success – and reiterated the importance of the broker community to the mortgage space across Canada. “We continue to tell our friends the best way to get a mortgage in Canada is through a mortgage broker,” he said. “That continues to be the message, and will continue to be our message.
“We’re doing everything we can to support the channel and trying to help people be more efficient, understand our products, and get out there.”
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