Broker spells out strategies for handling a wave of client renewals at higher rates
A feared mortgage renewal meltdown has yet to materialize in Canada, with higher rates presenting problems for plenty of homeowners – but so far not triggering the huge market strain some had forecast.
Consumers are cutting discretionary spending in growing numbers and many are struggling to pay bills, although there’s been no sign of a mortgage market contagion in the opening half of the year.
Unsurprisingly, though, with borrowing costs rising and mortgage rates remaining elevated, a growing number of Canadians are turning to mortgage brokers for help navigating a stormy market.
Two-thirds of respondents to a new Mortgage Professionals Canada (MPC) survey said they were more likely to use a mortgage broker the next time they need a mortgage, with 81% of those who had previously used one saying they would do so again.
Renewal conversation shifts gear
For brokers, that renewal conversation is no longer just about the mortgage, according to Renée Huse (pictured top), senior mortgage professional at Spire Mortgage Team. Instead, it also focuses on a deeper conversation about every client’s financial picture.
“It’s that holistic financial review to see how we can actually manage monthly cashflow and make you most comfortable,” she told Canadian Mortgage Professional.
“I think the strategy with clients has had to change, and it’s made us be better as brokers – digging more into people’s overall financial situation and making sure that we’re considering all aspects of the renewal, not just the mortgage payment.”
Still, Huse said that borrowers in her own market of Alberta appear to be weathering the renewal storm – partly because a buildup of home equity in the province during the past two years has meant plenty of homeowners want to refinance when it’s time to renew.
That means the opportunity to rework cashflow, pay off debts, re-amortize the mortgage over a 30-year period, and take some of the stress off.
“For the most part, we’re able to do that because a lot of homeowners that bought five years ago have gained 20% or more in equity,” she explained. “So that’s possible. But overall, I’m not seeing mortgages come up for renewal and payment ruining anyone’s life. I think it’s not as bad as what the market anticipated it would be.”
When playing the short-term rate game on a purchase isn’t the right call
Fixed mortgage rates have ticked upwards over the past week after threats of a fresh tariff wave by US president Donald Trump, while variable rates are also expected to stay elevated with the Bank of Canada unlikely to cut its policy rate at the end of this month.
But Huse highlighted that while rates are higher than during the COVID-19 pandemic – when borrowing costs plunged – they remain below the worst levels seen over the past 30 years, even if skyrocketing home prices are creating their own challenges for the market.
Homebuyers and owners playing the long game, she said, will still find plenty of value in the current market. “Housing is a long-term purchase. And when you’re asking speculative questions like, ‘Which direction are rates going to go? Which direction is the housing market going to go?’ maybe you’re losing the focus on that long-term investment,” she said.
Better questions to ask: “‘Does this home work for my family? Does this monthly payment work for my family?’” she added. “And so I try to keep a lot of the conversations focused there.”
While many hopeful buyers and other borrowers might be fixated on the short-term outlook for the housing market and where rates are headed, trying to give advice or predictions on prices and rates may not be the best course of action.
Trying to time the market isn’t the right approach, according to Huse. “I think we have to be careful about giving short-term advice on a long-term investment,” she said.
“I think when we get outside of that and we’re talking about [rates going] up or down, and the next Bank of Canada announcement, we’re sort of losing sight of what we’re actually talking about – which is a long-term investment that might house someone’s family for the next 30 years.”
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