The alternative mortgage market has grown significantly over the past several years as a result of regulatory changes aimed at stabilizing the Canadian housing market. These changes have forced lenders, brokers and insurers to evaluate their business practices and remain agile in an ever-changing environment. The dynamic nature of the industry has made both prime and alternative lending solutions a necessity for Canadians looking to purchase or refinance their homes.
The continual evolution of policies and guidelines is inevitable. Dating back to 2013, we saw the initial implementation of the B-20 guidelines, followed by B-21 in 2014 and, most recently, changes to insurance rules in October and November of 2016. These new policies were implemented partly in response to a number of Canadian urban housing markets that have been experiencing prolonged periods of house price appreciation. This appreciation has led to concerns from observers and market participants, resulting in an increased focus on the stability of the domestic housing market.
Rather than resisting change, it is important to embrace it in an effort to move our industry forward. Collectively, we need to acknowledge that regulatory changes are implemented to protect consumers, businesses and Canadians at large.
Changing guidelines have reinforced the importance of lenders, brokers and insurers working in partnership to find the best solutions for Canadian borrowers. With further changes expected this fall, it’s crucial for brokers to understand the solutions that their lender partners can provide. Working with a lender that can service clients with a broader spectrum of mortgage solutions will help to ensure business continuity in times of regulatory change. As lenders, it is vital that we continually evolve our products and programs to meet the needs of Canadians.
Accepting that lending practices have changed is the first and most important step. For both lenders and brokers, this involves altering our frame of mind in relation to how we approach each deal. Yes, one might say that the days of ‘slam-dunk deals’ are gone, but closing ourselves off to the unique opportunities present in today’s marketplace is a blinded approach. We can all benefit from relinquishing the past and transforming our practices to succeed and grow our businesses in the future.
Placing a focus and attention to detail on the application and submission to the lender is paramount. All mortgage applications need to make sense, and providing a strong rationale on every transaction allows for a more seamless approval process.
Although the impact of the pending B-20 changes is not fully clear at this time, we must unite as an industry toward our collective goal of maintaining and growing our businesses. The past year has demonstrated the criticality of strengthening our partnerships, keeping the lines of communication open and accepting change.
If there’s one thing that both lenders and brokers should take away from the past several years, it’s that pivoting your business focus is vital in any changing market. No one in our industry can afford to stand still.
Duncan Hannay is president and CEO of Street Capital Bank of Canada and Street Capital Group. He has more than 25 years of experience in the financial services and technology sectors.