Leading executives highlighted key trends at CMP's Summit
A Bank of Canada interest rate cut buoyed the mortgage market on Wednesday and stirred hopes that a fall uptick in activity is on the way – but leading lenders are continuing to take a prudent and careful approach amid ongoing economic uncertainty.
That central bank move, which lowers its benchmark rate to 2.5%, arrived amid growing signs that the Canadian economy is slowing and the labour market softening.
For lenders who took part in a panel looking ahead to next year at the recent Canadian Mortgage Summit in Brampton, caution and a lower risk appetite will remain key considerations as the industry closes out this year and moves into 2026.
Sushanta Sen (pictured top, far right), director, sales at MCAP, pointed to some economists’ belief that the country may already be in a technical recession as a factor behind that conservative approach.
A recent jump in the unemployment rate, he said, is another sign that strain in the economy could be worsening.
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“From a lender’s perspective in general [this] definitely means stricter guidelines,” he said. “It definitely means a focus on areas of strength as well as weakness. We understand there are certain parts of our country that may be impacted a bit more severely than others.
“Another important line for most lenders is preserving their current assets, which is currently the renewal book over originating mortgages. So from a borrower perspective, from a mortgage broker perspective, what does this mean? It means that we need to keep stepping up.”
Nelly Yuzbasiyan (pictured, top middle), director, regional sales and sales enablement at EQ Bank, also spoke to that cautious approach. “There have been a lot of regulatory changes over the past several years – so for us as a lender, obviously our risk appetite has tightened,” she said.
“We’re always assessing the market. We’re always looking for different ways to be careful around how we lend, especially given that people are overextended. We want to make sure that these people can actually make their payments.”
Fixed rates could stay sticky as bond market shifts
Imran Thaver (pictured top, second from left), director, national sales at Optimum Mortgage, highlighted movement in the bond market as a top trend the industry should be keeping an eye on, particularly as it could put upward pressure on fixed mortgage rates.
“The bond market right now is signalling the fact that there are some spreads… and lenders can pass the cut on to our borrowers. [But] the longer-term approach may be that rates actually will rise on the fixed side,” he said.
“I think that’s going to be really important for us to think about. That’s the right approach for all of our customers – and as a broker advising a borrower, you’re really thinking about what their risk tolerance is. The advice that all of you are giving to the Canadian public is absolutely instrumental and so it’s critical for us moving forward that you guys have a good understanding.”
MIC lenders highlight emerging trends
Fisgard’s national broker relations manager Reaza Ali (pictured, second from right) said he had seen more sub-500 credit scores in the first quarter of this year than in the last seven years. He highlighted factors lenders in the MIC (mortgage investment corporation) space were focusing on: “It’s not just about the property, location, and loan to value,” he said.
“Looking at the borrower and their capacity to repay and managing the debt loads that they’re going to find themselves in is extremely important. These are tougher conversations to have.”
Gregg Sinclair (pictured, far left), chief operating officer at Magenta Capital Corporation, also spotlighted lower beacon scores and higher debt loads as characteristic of loan applications this year.
He agreed that difficult conversations will be needed for brokers. “It’s really, ‘How do we best find a solution for your clients that fits for us and for them?’” he said. “Sometimes we have to say no. It will get better in the long run, but there are some challenging points ahead of us.”
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