Changing demographics, economic storm clouds and other factors are all giving brokers and lenders food for thought
Demographics are shifting rapidly in Canada, with huge implications for the mortgage and housing markets in the decade ahead.
Canadians aged 65 and older represented just below 19% of the population in mid-2023 – and Statistics Canada says that share is likely to grow by 2030 to somewhere between 21.4% and 23.4%.
That trend is arriving with older Canadians reportedly feeling greater financial strain as retirement looms, either because of rising living costs or because they’re supporting their children or grandchildren.
On the flipside, plenty of younger Canadians are facing the question of how to support their own old-age parents, raising the prospect of a surge in multigenerational home construction allowing several generations of a family to live in the same property.
Lenders are keeping a close eye on those trends. “We’re starting to see this shift,” Imran Thaver (pictured, second from left), director of national sales at CWB Optimum Mortgage, said at the recent Canadian Mortgage Summit in Brampton. “In the past, it could have been that [when] you turn 18, you move out.
“When we take a look at the demographics and how affordability is impacting individuals’ qualification for homes, we’re seeing 30-somethings now staying at home. And we’re also starting to see the opposite where [Canadians] are saying, ‘What can I do from a housing perspective to take care of my parents?’”
Multigenerational homes are becoming more popular, Thaver acknowledged – and from a lending perspective, “We’re going to have to make sure that we’re coming up with policies to address those. And we’re also going to have to look at differentiated income and income streams.”
Lenders focusing on flexibility
A landscape that’s shifting dramatically, Thaver said, will also require lenders to pivot and adjust their own lending criteria amid that evolution.
Nelly Yuzbasiyan (pictured, centre), director of regional sales at Equitable Bank, also highlighted a significant gap between many Canadians’ target for retirement savings and what they’ve actually put away.
That means a probable “huge” uptick in reverse mortgages is on the way in the years ahead, she predicted, as more Canadians tap into home equity to compensate for that savings gap.
That trend is important for brokers, according to moderator Leah Zlatkin of Mortgage Outlet: “Reach out to your clients and talk to them about their parents,” she advised the broker community. “Reach out to your contacts and talk to them about the older people in their families that are looking to retire.
“If you’re feeling like your book is a little slow right now, all of those mining strategies, mining for demographics and things like that, are really going to help you boost your book when we’re seeing the markets a little bit slower for this time of year.”
Brokers, borrowers facing familiar challenges at present
In the current market, stretched affordability and higher interest rates are keeping plenty of hopeful homebuyers on the sidelines. But Reaza Ali (pictured, second from right), speaking on the same panel, also encouraged brokers to realize that there are still Canadians in a position to purchase right now.
“You guys really do need to look at the demographics of your clientele and your book of business in general,” he advised brokers.
“There are people out there that have money and they’re ready to purchase. The market we’re in right now is a great market if they have the resources to do so. Search them out and start building your book with that clientele.”
For those borrowers facing challenges – especially when working in tariff-impacted industries – Magenta Capital Corporation chief operating officer Greg Sinclair (pictured, far left) highlighted the importance of strong and detailed communication with lenders.
“Come with a plan. Especially for MICs [mortgage investment corporations] like us – we’re a one-, maybe two-year lender,” he said. “We want to be that stepping stone. Come with the plan ready for the underwriters because you will get asked, ‘What’s the exit strategy? What’s the plan for this client?’
“Come with something that’s very organized and ready to communicate that’ll help us have confidence in funding a deal. If somebody’s in a sector that’s more likely to be hit by tariffs – OK, what’s the plan if they get laid off right now? How are we going to manage that?”
And Sushanta Sen (pictured, far right), director, sales at MCAP, also underlined the responsibilities of mortgage brokers with the uncertain economic climate continuing.
“Brokers who win are ones who double down on education,” he said, “and focus on their customers not as their mortgage advisor but as a financial advisor if possible. Someone who’s looking beyond rates, someone who’s looking at their clients’ real situation.”
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