What’s shaking Canada’s mortgage market foundation?

By Kathy Catsiliras, Director Consulting Services, Data & Analytics

A series of regulatory changes introduced to address rising affordability issues in the last few years, has cooled down the market and made it tougher for insured mortgage providers. As a result we’ve seen consumers move to the shadow market (ie. unregulated and provincially regulated institutions) thereby creating a shift in lender distributions. For lenders, one key growth avenue may come from optimal retention and acquisition strategies of mortgage switchers/shoppers as well as understanding underlying consumer motivating behaviours. For example - renewing with an existing lender does not require a stress test whereas switching between lenders may, if they are a federally regulated financial institution.

Key growth opportunities for 2019 are likely to come from an expected 9%[1] increase in immigration, growth in the Quebec market and switching activity in British Columbia and Ontario especially from the 2015/2016 mortgages that are up in their term and closed before all the regulatory changes occurred and where consumers are now facing a new landscape of changes.  In Quebec, an increase of non-financed purchases suggests foreign investment continues to be an opportunity. Lastly, digital solutions are a key focus and an expected growth channel in the market. As the digital revolution pushes us to transparency and ease of use, banking services will need to provide instant digital solutions for lending as we see more pre-qualification and pre-approval solutions being digitized.

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