Mortgages and Housing: Lessons Learned in 2018

December 20, 2018

As 2018 comes to an end, many of us are beginning to plan and look ahead at what 2019 will bring. Mortgage professionals are no exception. Many of you want to know about Canada’s housing industry outlook and lessons learned over the past year.

Here’s a list of 4 things you should keep in mind going into 2019, supported by CMHC’s Housing Market Outlook and the 2018 Mortgage Consumer Survey.

1. Housing activity should moderate

The last few years have been historically high and, in some cases, even record-breaking for the housing market. But in 2019 and 2020, Canada’s housing markets should slow down, overall. This is one of the main findings from our Housing Market Outlook (HMO) for Canada, published last month.

Both new home starts and existing home sales are expected to moderate from recent high levels. MLS prices are expected to come more in line with economic fundamentals like income growth, rising mortgage rates and population growth.

One key driver that’ll affect the mortgage industry is the moderating pace of growth in the Canadian economy from recent strong levels. Another is a possible rise in interest rates. Together, these 2 factors will contribute to a slowing housing market.

2. Concerns about affordability

Buying a house is often the most important investment in a person’s life. This likely explains why affordability is the number one factor considered by homebuyers when buying, according to our 2018 Mortgage Consumer Survey.

Forty-two percent of first-time buyers and 31% of repeat buyers felt concerns or uncertainty about buying a home. Of those, 58% of the first-time buyers had concerns or uncertainty related specifically to unforeseen costs.

This signals a great opportunity for you to provide relevant information and advice to buyers during the homebuying process. It’s also a great opportunity to build and strengthen your relationship with homebuyers. CMHC’s Homebuying Step by Step Guide is a tool you can pass on to your clients. It helps Canadians look at their housing options, expected costs and personal financial situation.

3. Technology

It’s no surprise, we live in a world where technology’s gaining more and more importance every day. And the housing industry is no exception.

Online research continues to be the most popular way to gather mortgage information, according to our 2018 Mortgage Consumer Survey. Seventy percent of first-time buyers and 75% of repeat buyers looked to various online sources before buying a home.

About half of mortgage consumers would feel comfortable using more technology to arrange their next mortgage transaction. This trend is likely to increase in the coming years.

For this reason, your digital tools must be up to date and effective in order to meet consumers’ needs. It’s also important to maintain an active presence on social media. Need convincing? Get this: more than one third of mortgage consumers used social media to gather mortgage-related information.

4. Financial literacy

It may be hard to think homebuying season is around the corner, but it’ll be here before we know it. It’s never too early to help Canadians prepare to buy a home. As a mortgage professional, you’re in a unique position to provide clients with sound financial and homebuying advice.

A great place to start is to support your clients in budgeting for their purchase. The Mortgage Consumer Survey showed that only 76% of first-time buyers and 62% of repeat buyers had a monthly budget. Meanwhile, an even smaller percentage had a monthly buffer for unexpected expenses (64% of first-time buyers; 59% of repeat buyers).

Homebuyers are generally satisfied with the advice they receive from their mortgage professional. Still, they’d also like more information on: