Ensuring clients are as prepared as possible is a key consideration for top brokers
Renewals are set to play a more dominant role than ever in Canada’s mortgage market in the coming years, with an estimated $900 billion worth of mortgages up for renewal between now and 2026 – but how can brokers and agents prepare themselves for that flurry of activity?
For Sharon Davis (pictured), of DLC BlueTree Mortgages WEST, top of mind as the renewal wave approaches has been contacting clients as early as possible to talk them through their options and make sure they’re braced and ready for what’s in store.
“We’re reaching out to clients earlier than we have ever before,” Davis told Canadian Mortgage Professional.
“If we haven’t talked to them through their anniversary date, we’re reaching out to them six months early just to get things ready and, honestly, in a dropping rate environment, we’re looking at what you would qualify [for] today. How does it look? Do you need to consolidate some debt? Do we maybe need to do some credit repair?”
That process is akin to preparing a first-time homebuyer for their mortgage, Davis said, with the discussion centred around cash flow more than rate.
How can mortgage brokers show value in the upcoming renewal wave?
It’s a situation that appears tailor-made for a mortgage broker, with solid advice built around a client’s specific circumstances and financial sensitivities essential to ensuring they get the best possible deal upon renewal.
“AI [artificial intelligence] is kind of out of the picture because AI can’t solve problems like this for them,” Davis said. “If you ask a question, it tells you something, but it can’t help you with solutions about things that you have to talk through.”
Borrowers are likely to consider as wide a range of options as possible when renewing, accroding to Leah Zlatkin of Mortgage Outlet.
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While many borrowers will undoubtedly be stressed about the possibility of their mortgage rate rising well above the original contract rate upon renewal, Davis said a doomsday scenario resulting in scores of Canadians losing their homes appears an unlikely prospect.
Having seen plenty of cycles in times of both boom and bust, the industry veteran indicated that the current downturn was far from an unprecedented collapse, or something the likes of which the industry had never seen.
“I think if you’re looking at this as a moment in time, things are going to get better,” she said. “Rates are going to get better. Inflation is going to go down. We’re going to be in a boom again. It’s just a matter of time.”
Comprehensive suite of options required in increasingly unaffordable current market
While brokers and borrowers wait for the storm clouds to subside, Davis emphasized the importance of ensuring that all parties in the mortgage process have as comprehensive an understanding as possible of their options, and what each would entail.
That’s especially relevant in the current climate, she said, when many Canadians are dipping into their pockets to provide downpayment assistance to relatives in an era of enormous affordability challenges in the housing market.
Royal LePage’s latest housing market analysis suggests that Metro Vancouver home prices are likely to tick upwards by 3% throughout 2024, indicating little relief for would-be buyers – particularly first-time entrants to the market – in one of Canada’s priciest areas for real estate.
While home prices dipped across many markets amidst the wider cooldown of 2023, average benchmark prices in Vancouver and Toronto – the two hottest markets in the country – remain perched well above $1 million.
“I think it’s important to look at all the aspects of a file, and educate all levels of people that are involved in a process,” Davis said. “It’s not just talking to the people [buying a home].
“We’re seeing reverse mortgage [situations] where older people are looking at gifting equity to grandchildren or even to their children, so that’s a big transfer of wealth. And I think people need to be more educated about that as well as co-signing and things like that.
“Because sometimes, that’s the only way that people are going to get in. They just need help, especially in markets like Toronto and Vancouver.”
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