Banks are tipping their hand as to just how much appetite they still have for mortgage lending, with RBC pointing to the continuing low-rate environment and the offset it provides households swimming in debt.
“Despite debt rising to all-time highs, Statistics Canada’s debt-service ratio (calculated as interest payments on mortgage and non-mortgage debt as a per cent of personal disposable income) was 7.3 per cent in the first quarter of 2012, holding around the general level that has prevailed since the middle of 2009 and below the series’ long-run average of 8.1 per cent,” write RBC economists in their monthly analysis for July. “While there are historically elevated levels of debt in the economy, the benign interest-rate environment and sustained income growth means that households are not being overwhelmed by required debt-service payments.”
Independent analysts, now reading between the lines, suggest the statement indicates banks have little intention of easing their feet off the throttle. At least not in terms of aggressively pushing their mortgage product to consumers, despite the tighter mortgage rules and guidelines they and lenders face.
RBC’s emphasis on rates in the economic review also hints at the possibility of another spate of rate chopping and competition among lenders.
Brokers are already anticipating a resurgence in the rate wars as the market slows and the fight for borrowers heats up.
That would likely accrue to the benefit of deep-pocketed big banks and not the mono-lines that brokers increasingly depend on.
Still, brokers are just as confident that they increasingly have the upper hand in terms of quicker turnaround times and the growing realization that their customer service moves their value-proposition beyond rate.