The Canadian mortgage industry continued to document growth by the end of 2016, but industry experts are predicting a slowdown in several key areas, thanks to changes in rules for government backed mortgages, the emergence of mortgage brokers as key players in the industry, improving technology and many others. Experts and stakeholders in the real estate industry have long expected the mortgage industry to come crashing down in 2017.

However, statistics indicate that while there may be a bit of a slowdown in the fast rising pricing and the number of homes purchased, demand for housing will continue to be high in many areas unless there is a sudden rise in interest rates or drastic change in mortgage lending standards. The following trends are predicted for the Canadian mortgage industry in 2107:
  1. Decline in sales activity
The Canadian Real Estate Association (CREA) estimates that there will be an average drop of 3.3 per cent in home sales in 2017, thanks to tightened mortgage regulations and the shortage of affordable housing units especially for single family homes. Sales activity is expected to decline in several areas including Nova Scotia (2.1 per cent), Ontario (2.7 per cent), Saskatchewan (1.2 per cent) and many other areas. is expected to favour consumers, who could possibly see a drop in house prices in some areas.
 
  1. Two sided market
Experts predict that the Canadian market will continue to exhibit a two sided nature, with demand in some parts of the country (Vancouver and Ontario) skyrocketing while other parts of the country experience low demand thanks to affordability issued.
 
  1. Creating communities
Canada’s urban populations will continue to grow, attracting millenials looking to build their careers, boomers looking to find a ‘nest’ for their retirement years, immigrants and many others. Real estate developers are taking advantage of the growing demand for urban housing to creating spaces that cater to the entire community’s needs such as shopping malls, schools, public parks, playgrounds, eating places and other recreational facilities. Governments are also encouraging the development of all inclusive communities around transit hubs so that people are able to work where they live and vice versamay have an impact on productivity.
 
  1. Declining affordability
House prices are expected to skyrocket in 2017 and beyond, effectively shutting out many people who would like to own a home in certain areas but lack the funds to do so. High demand for both residential and commercial space in Ontario, British Columbia and Montreal will continue to push prices up. First time home buyers and immigrants may be forced to settle for smaller housing units or shared housing in order to afford housing in Toronto, Vancouver and Quebec. In spite of all this, supply will continue to be low as developers look for affordable space to construct new unites. Proposed solutions to the problem of high demand and low supply have included lobbying government to release a percentage of the lands held for greenbelts for residential development, and agitating for the reduction in municipal red tape with regard to the approval process.
 
  1. Disruptive technology
Technological advancements in the housing market will continue to disrupt and displace existing products, stakeholders and markets. The availability of property information on the internet is making more potential tenants and buyers increasingly aware of their rights and the options they have in a particular market. People looking to buy or prices, property features, legal buying processes and varied other information with regard to real estate. This means that the buying public is more informed and therefore willing to wait until they find a property that fits their exact needs. On the bright side, disruptive technologies are making it easier for developers and property owners to present their product to potential customers. The use of 3D computer simulations of properties, for instance are doing away with the need for showrooms as potential renters and buyers can simply go online and view properties they are interested in from the comfort of their home or office.
 
Disruptive technologies are leading to the creation of smaller office spaces. A large number of people today telecommute and the use of co-working spaces means that workers no longer have to rent large spaces that are bound to be costly. Finally, the availability of residential technologies such as smart home systems, green appliances, environmentally friendly technologies such as energy efficiency and many others mean that developers now have to deal with customers who are extremely picky about the spaces they live in, and many property owners and investors are having to incorporate many of these features in order to attract buyers and renters.
 
  1. Longer term renting
The average price of homes in large cities like Vancouver and Toronto runs into the hwas $710,000 in Toronto. With home prices expected to remain in these high levels over the next few years, many people are choosing to rent rather than purchase properties in high demand areas. Renting is expected to become the norm in both Toronto and Vancouver as residents weigh the costs and benefits of renting vs. purchasing. Real estate building smaller units at affordable prices for renters. A trend has been noted among home owners who are opting to sell their homes and move into luxury rental units.
 
  1. Global changes
While Canada is seen as a low risk, stable investment venue, global changes such as Brexit and the US presidential election results have real estate stakeholders fearful of ripple effects that may affect the Canadian real estate market. Terrorism, the Middle East refugee crisis and the influx of up home prices and make property more inaccessible for Canadians.
 
  1. Fluctuations in gas and oil prices
Price changes in gas and oil have Alberta experience recession and a general decline in GDP. Low demand and an oversupply of commercial and residential spaces have seen investors’ record losses over the past couple of years, causing a general slow-down in real estate investment. Unless gas and oil prices improve, this trend is expected to continue but investment should start to yield good returns in the long run.
 
 
Let’s look at Ontario specifically for a minute…
Ontario, and specifically Toronto, Ottawa and some of the other larger cities in the province continue to experience economic growth. Statistics show that the Canadian real estate sector experienced a 46 per cent growth in 2016 and GDP remains at a constant 2.6 per cent for 2016 and 2017. Shortage of land for building has led to an increase in house prices leading to people choosing to renovate homes or rent instead of purchasing.
 
Navigating through the rules and regulations of the Ontario mortgage industry can be difficult especially for first time borrowers. However, the right mortgage broker will be able to provide the correct information and guide you in the process of acquiring the right type of mortgage. A good mortgage broker will be able to guide you on the various types of mortgage insurance, interest rates on different mortgage products, and many other variables. They will inform you on various factors such as the amount of down payment required in Ontario, the various types of loans available, the best rates and help you sort you through the various providers so that you can get the best deal possible.
 
Getting a mortgage in Ontario need not be a difficult and convoluted process. With the right information and help by your side, you can take advantage of the growing Ontario real estate market either as a buyer or an investor. Ensure to do your research, learn as much as you can about the Ontario mortgage market and pick the right partner in order to benefit fully from the province’s housing market.

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Dan Caird

Dan Caird is a mortgage agent with Dominion Lending Centres, a national mortgage brokerage and leasing company with more than 2,000 members offering free expert advice across Canada. An experienced real estate investor, Dan used this passion to enter the world of mortgages. Combining sound advice with years of mortgage financing experience, Dan works hard to ensure his clients get the best mortgage product available for all their financing needs.

For more information, please call (905) 213-1475, or visit Mortgages By Dan.