Are brokers missing out on a significant opening for their businesses?
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For mortgage brokers, there’s an often overlooked though considerably profitable gap in the market – Canadians aged 55 and above. Speaking to CMP, Rene Quercia, senior vice president - broker channel at HomeEquity Bank, said that there’s a wealth of opportunity that’s actually being missed here.
“We call it the best kept secret because, frankly, most mortgage brokers don’t think of this demographic as an opportunity for them,” he told CMP.
Quercia, who’ll be discussing this topic at our upcoming Canadian Mortgage Summit, said that while many brokers assume that older Canadians don’t want or need their services, this simply isn’t the case.
“Baby Boomers right now account for over 25% of the Canadian population,” explained Quercia. “They’re technically over the age of 55, and so they qualify for the CHIP reverse mortgage.”
And, as these individuals enter retirement, they often face unexpected financial challenges such as rising inflation and living costs – with many of them finding themselves with significant equity in mortgage-free homes, which can be a valuable resource to improve their retirement quality.
“If a broker has been in business for several years, the chances are that they’ve seen their clients evolve and pay down their mortgages, eventually getting to a place where perhaps they don’t even have mortgages,” added Quercia.
HomeEquity Bank offers products designed to meet these needs. For instance, the CHIP Reverse Mortgage and Income Advantage can provide monthly cashflow, helping retirees maintain their lifestyles without the burden of traditional loan repayments.
“If they want to augment their pension or retirement savings, they can certainly do that with the CHIP Reverse Mortgage. We have a program called Income Advantage, where they can basically take monthly payments to help with their monthly cashflow,” Quercia said.
Additionally, Quercia highlighted a growing trend where older Canadians help their children or grandchildren enter the housing market. He advises brokers to consider the financial implications for parents providing such gifts.
“We always encourage a broker to ask the parents where the money is coming from because the chances are it either means they have to cash in investments or borrow the money themselves, which has cashflow implications, especially in retirement,” he said. “We call it a living legacy.”
The session will also focus on what Quercia described as a “trillion-dollar opportunity.”
“If you look at Canadians 65 years and over that own homes, there’s an accumulated wealth equity in the homes of a trillion dollars in Canada,” he said. “To attract and retain clients, especially those facing financial adjustments due to rising mortgage rates, Quercia advises brokers to consider a reverse mortgage as a solution.
“If you have someone over the age of 55 who has a mortgage renewing, you might want to consider taking the reverse mortgage and paying out the traditional mortgage. It alleviates them of the monthly payments,” he said.
One of the biggest hurdles HomeEquity Bank faces is the stigma associated with reverse mortgages. “There’s still a stigma. It’s more of a myth than anything,” Quercia said. “Our five-year interest rate is 6.69%, which is actually lower than the current HELOC rates. And we have a No Negative Equity Guarantee, which means that if the property depreciates and the mortgage amount due is more than the gross proceeds from the sale of the property, HomeEquity Bank would cover the difference between the sale price and the loan amount.”
Quercia hopes events such as the upcoming Canadian Mortgage Summit will help dispel myths and educate brokers on the benefits and safeguards of reverse mortgages. After all, with the right knowledge and tools, brokers can better serve the 55+ demographic, turning a once-overlooked segment into a thriving part of their business.
Don’t fall behind your competition this fall – book your place at the Canadian Mortgage Summit here.