What’s Happening? Canadian Housing Market

Since 2008, the federal government has made several changes to the rules for mortgages insured through the Canada Mortgage and Housing Corporation (CMHC) to cool the housing market. This is good because it protects our economy but can prove very challenging for independent mortgage brokers and agents as it can limit and even eliminate top selling mortgage products.

We saw 30 year amortizations disappear and loan to values on high ratio refinances reduce significantly.

Well, this last month the news sites were abuzz about what could be in store in the future for the Canadian housing market.

In October the National Post reported that the IMF reportedly warned that there may be a need for even tougher housing rules to further slow what was described as an “overvalued housing market”: http://business.financialpost.com/2014/10/07/canada-may-need-tougher-rules-to-slow-overvalued-housing-market-imf-warns.

In October, the BNN reported on how a housing slump would impact retirees; within this article were some interesting facts. Consumer debt in Canada has risen for 87% of disposable income in 1990 to 164% today! If the housing market did wain, some of your clients may find themselves in a troublesome financial predicament: http://www.bnn.ca/News/2014/10/8/How-a-housing-market-decline-could-put-Canadian-retirement-savings-at-risk.aspx.

In October the Huffington Post reported on a Royal LePage House Price Survey that found that while the average price of real estate rose, the market is showing signs of slowing down. In the article the Huffington Post quotes Phil Soper, president and CEO of Royal LePage:

“In the seven years since the Canadian housing market began its recovery from the worldwide recession, home price growth has been robust, often greater than the long-term average. We are now experiencing a natural slowing in the rate of year-over-year price appreciation, with real estate markets moderating in most parts of the country, a transition to what our agents refer to as a ‘Goldilocks market,’ one that is neither too hot, nor too cold.” 

With constant speculation over what may or may not happen in the market it can be hard to know how to adjust your plans accordingly.

You can’t plan for what you don’t know, like when the BOC will raise rates or CMHC will change their lending guidelines, but you can plan for what you do know.

Canadians are in debt – this is a reality. To help prepare your clients to be on the firmest financial footing, you can help them understand the ways that they can leverage their home equity to consolidate debt, reduce monthly payments and interest.

By leveraging tools like Purview, you can look at past clients and identify where there have been increases in property value and reductions in mortgage value to identify upsell opportunities. You can also help new clients identify accurately exactly how much equity they have which may change their re-financing plan.

No one can really predict what will happen in the Canadian Housing Market but what you can do is be prepared to adapt and work with your clients so that they are not negatively impacted by future changes.

To stay updated on recent housing trends or mortgage changes, or to find out more about everything Purview has to offer, please contact us today at 1.855.787.8439.