A surprisingly resilient economy and underlying demand point to positive signs ahead, says company president
It’s no secret that rising interest rates and a bumpy economic landscape are weighing down on Canada’s mortgage market – but there’s still plenty of opportunity to be found for mortgage professionals and their clients alike, according to one of the most prominent new lenders in the space.
Hash Aboulhosn (pictured top), president of Rocket Mortgage Canada – which last week announced its debut as a lender in the Canadian market – told Canadian Mortgage Professional that there were enough positive economic indicators at play to suggest some bright spots on the horizon.
“Canada’s in a very interesting spot where the fact that interest rates have risen substantially had definitely created a headwind for housing and the mortgage industry,” he said.
“That said, I think that when you look at the underlying data points, what you still see is very, very low unemployment. You see falling inflation. You see a tremendous amount of immigration coming to Canada. And so I think when you look past the initial challenge of a rising interest rate environment, the long-term prospects for this market are still incredibly strong.”
Mortgage pros should brace for a tough market ahead, according to Shaun Westlake of Guiding Star Mortgage Group. Pain for brokers, realtors, and consumers is expected to persist with no relief in sight. https://t.co/SO0ZCLBfOb#mortgagenews #mortgageindustry #mortgagemarket
— Canadian Mortgage Professional Magazine (@CMPmagazine) July 28, 2023
How lenders will be surveying a surprisingly strong economy
Lenders will remain attentive to the prospect of that robust economy continuing, Aboulhosn said, and a possible uptick in both demand and supply in the housing market. Amidst that backdrop, continuing to evolve and drive the mortgage process forward could be more important than ever.
“I think that the opportunities for the lenders like us are really to keep our eyes focused on the point on the horizon that sees the economy continue to expand, the housing supply increasing, the demand for housing continuing to increase,” he said, “and really focusing on… the promise of delivering certainty in the mortgage experience, making the process easier, more visible, more convenient for clients.”
Rocket launched in Canada last year on the brokerage side through the rebranded Edison Financial, with Aboulhosn noting that the company’s steady growth through a volatile market had stood it in good stead for a strong performance in the lending space.
The company is currently offering mortgage products in Ontario, it said in a press release last week, with plans for rapid expansion to other provinces in the coming months.
“The opportunity really is about just continuing to execute well, growing our market share – which we’ve basically managed to do despite all the turbulence very steadily rising since 2020, both in a very strong market and very down markets,” Aboulhosn said.
“I continue to be very optimistic and we see it in the way that we deliver as we continue to make our team more productive, the client experience better… I certainly take note of the challenges, but I try not to let them distract too much from our long-term objectives.”
How resilient has Canada’s economy proven in the face of rising interest rates?
To date, the Bank of Canada’s aggressive spate of interest rate hikes over the past 16 months has failed to plunge the national economy into a recession. It grew at a rate of 0.3% in May, according to new data released by Statistics Canada, although a slowdown likely took place in June.
After hovering close to record lows for much of the past 12 months, Canada’s unemployment rate has started to tick slightly upwards – rising to 5.4% in June, StatCan said, despite the addition of 60,000 jobs to the economy that month.
Job figures for July are set to be released this Friday (August 4), an announcement that will be keenly watched by observers including the central bank as it weighs up whether further rate hikes are required in its next policy rate meeting, scheduled for September.
CIBC chief economist Avery Shenfeld recently cautioned against jumping the gun on assuming that Canada has successfully escaped a so-called “hard landing,” indicating that even if the country avoids a recession it could still see “a three-quarter period of negligible economic gains, and a half point or so climb in the jobless rate on both sides of the border.”
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
