In a one-on-one interview with MortgageBrokerNews.ca, one economist discussed the biggest issues facing brokers in 2015 as well as a forecast for the condo market over the next few years.
The one thing that will have the biggest impact on broker business in 2015 is an expected hike to interest rates, according to Assistant Chief Economist for Laurentian Bank Securities Sébastien Lavoie.
“Rates will go up modestly, hopefully,” Lavoie told MortgageBrokerNews.ca. “Ideally you want to cap the increase to the interest rate; the last thing you want to do is destabilize what you have stabilized over the last few years.”
Lavoie --along with Warren Jestin, senior vice-president and chief economist with Scotia
bank and Stéfane Marion, chief economist and strategist with National Bank
of Canada -- spoke about industry forecasts and trends at CAAMP
’s Mortgage Forum earlier this week.
And for Lavoie’s part, he believes there are two current threats to Canada’s housing market.
“There are always two factors; interest rate shock and unemployment shock,” Lavoie said. “The key right now for Canada is to pay down principles and not just (focus on) debt servicing; if the next recession happens it’s better to happen in 2020 than 2016.
“The key is time – how long the recovery will last,” Lavoie continued. “Canada’s economy is entering a new sweet spot; (home) prices are not too high and not too low.”
Lavoie also believes the ultimate test will come for Canada’s condo market in the next 2-3 years; over that time, Canadians can anticipate a better sense of the health of that segment. And according to Lavoie, supply and demand isn’t the issue. Condo sizing is.
“How small can you get; they key for Canada is how builders manage their supply,” Lavoie said. “Sellers may be pushed to discount to sell units and that could trickle down to other facets of the market.”