DATE

Dominion lending

Canadian Homebuyers Flocking to Broker Channel as Credit Tightens

Steve Saretsky -

With the introduction of the new mortgage stress test in January many believe the market could come to a simmer. However, just over a month in and the condo market continues to boom. Vancouver condo prices hit a record high of $1,090, 317 in January. Buyers are eagerly pulling the trigger in order to beat out expiring rate holds and rising mortgage rates. Meanwhile as some borrowers face getting squeezed out, the shift to private lenders is growing. Some private lenders are seeing business double or triple.

Dave Teixeira, vice president of operations at Dominion Lending, says “Dominion mortgage brokers are seeing a higher rate of rejection and clients have to submit multiple applications to various institutions before finding a lender that works.”

As a result, Teixera adds, “Normally, we would see our volume going to the big banks and monolines, and now we’re seeing a little bit more of that, roughly up to 20 per cent… moving over to credit unions.”

Robert McLister, a mortgage planner at IntelliMortgage and the founder of RateSpy.com summarizes the situation, “The demand is shifting down the ladder, so you have these less regulated lenders with higher risk tolerance now seeing materially more business. And they can charge more, and they can be pickier with the types of borrowers that they lend to.”

This is common late cycle behaviour as borrowers begin seeking out more creative ways to obtain financing. The shift away from traditional banks and towards the mortgage broker channel grew noticeably in 2017 and will surely grow larger in 2018.Canadian mortgage broker growth

Source: HedgeyeAs per the data which is sourced from CMHC, first time buyers, who arguably need the most help with financing, provided the largest percentage change year over year, growing from 26% to 35% in 2017.

Stay Informed. Join My Weekly Vancouver Real Estate Round-Up.

 

Join the Monday Newsletter

Every Monday morning you'll receive a short and entertaining round-up of news on the Vancouver & Canadian Real Estate markets.

"*" indicates required fields

The Canadian Economy

Steve Saretsky -

Happy Monday Morning! We got a string of new data this past week confirming inflation in consumer goods, and housing are proving to be more than transitory. Canada’s consumer price index continued to drift higher with prices hitting an 18 year high, up 4.7% from last October. The recent floods in BC...

Steve Saretsky -

The calls for impending interest rate hikes continues. CIBC’s chief economist, Benjamin Tal, was out recently suggesting the Bank of Canada could hike its benchmark interest rate at least six times beginning in early 2022. “I think there is a risk of getting into the market at today’s rates,” noted Tal....

Steve Saretsky -

The BC Government announced it is looking at several cooling measures for the housing market in 2022. They have highlighted two measures. The first is an end to the blind bidding process, and the other is a mandatory “cooling off period” which will allow any buyer a 7 day recession...

Steve Saretsky -

The Bank of Canada continues to slowly drain liquidity after flooding the system with a firehose of cash during the pandemic. Bank of Canada governor Tiff Macklem announced the end of Canada’s QE program (also known as money printing). Furthermore, in Macklems words, “We expect to begin increasing our policy...

Steve Saretsky -

Consumer price inflation ripped higher in September, surging 4.4% year-over-year, the fastest pace of price increases in 18 years. Let’s discuss this further. We have an inflation problem and the Bank of Canada remains of the view that inflation will be transitory. Although they really can’t say otherwise, for if...

Get the Saretsky Report to your email every month

The Saretsky Report. December 2022