Finding mortgage affordability in times of inflation
Understanding that Canadians are struggling with homeownership and mortgage affordability over the foreseeable future, there are some things you can do as a mortgage broker to address them directly.
Whether your clients are looking for a new home or need to refinance, talking to an informed mortgage broker can really help them to understand their options in market uncertainty. Keeping this in mind, it’s important to include these key topics in your client conversations:
- Rising mortgage interest rates
- Inflation and the increased cost of living
- Meeting the B20 mortgage stress test
- Lack of available housing, especially in major centres
Clients who are looking to buy a home for the first time or are moving from their existing home may prioritize location over size and vice versa. Understanding their requirements around this and having these conversations up front may help the buyers focus on solutions that will work well for them now. These may seem like hard conversations, but your expertise as a mortgage broker will be invaluable to meeting your client’s needs.
According to the 2022 RE/MAX Report on Housing Affordability in Canada:
RE/MAX Canada asked Canadians to define what “housing affordability” means to them – 38 percent of survey respondents defined affordable housing in Canada as “a home they can afford and meets their basic needs and includes some of the liveability elements they like such as proximity to school; or walkable neighbourhoods,” to name a few.
The new working-from-home (WFH) economy can provide significant flexibility for clients’ buying opportunities by considering neighbouring rural communities, which can increase affordability or allow for more disposable income by benefitting from cheaper housing costs. As also stated in the 2022 RE/MAX Report, “the most common concession is relocation, as identified by 64 percent of survey respondents – a trend that continues to reign as a primary influence in local housing markets across the provinces and territories.”
As a mortgage broker, you also have access to the best mortgage rates, which can help your clients with the best solutions for refinancing. This article can help your client find the most affordable refinance options.
Another way to increase affordability through lower monthly payments is by increasing the mortgage amortization period to 30 or 35 years. At Bridgewater Bank, “We understand all that buyers are up against right now. We saw a way to give brokers and their clients more breathing room with longer amortization periods. We are always looking at the levers to be a better partner for our brokers.” said Jason Provencher, Vice-President of National Sales.
Working with your client allows you to find affordable solutions by navigating uncertain market conditions while providing stability and foresight with one-to-three-year mortgages.