In terms of competition, brokers, you ain’t seen nothing yet. RBC is now forecasting mortgage loan growth will get cut in half over the next two years compared to last year’s 5.4 per cent.
The prediction, part of a note from analysts at the bank’s capital markets division, is being viewed as the latest reading of the tea leaves for Canada’s housing sector.
According to the report, mortgage loan growth will slow to between 2 per cent and 4 per cent over the next 48 months. That rate mirrors the sector’s performance in the turbulent 1990s and is considerably off of the 13 per cent growth Canada’s mortgage lenders experienced in 2008.
The analysis is "based on the total mortgage debt outstanding in Canada ($1.2 trillion)," Geoff Kwan, an analyst at RBC told MortgageBrokerNews. "We have no specific comments on where we think originations will be ... the data in Canada is not available on originations."
Still, for brokers, that tamped-down mortgage loan growth suggests they’ll face increased competition for fewer originations well into 2015. The banks have already ramped up their originations efforts with rate promotions meant to win consumer attention, but still keep them on the right side of Finance head Jim Flaherty.
He has criticized the low interest rate offers of some big lenders as encouraging the kind of consumer debt expansion tighter mortgage rules introduced last July were meant to curb.
Still, broker rates remain among the lowest in the marketplace, although analysis suggests bank branches are undercutting those offers where possible.
The result has been the continuing use of buydowns, complain some brokers, worried that phenomenon erodes broker value-add. But the pressure to continue with the practice may only continue, said one mortgage broker pointing to RBC’s own rate match offer and any pressure it exerts on the broker channel.