Canada’s housing market is expected to rebound in 2025, with lower borrowing costs and new mortgage rules making homeownership more accessible. However, economic uncertainty remains, with the prospect of a US trade war that could slow growth, increase inflation, and impact housing demand. For mortgage brokers, this evolving landscape presents both challenges and opportunities. By staying informed and providing strategic guidance, you can help your clients make confident, well-informed decisions in a shifting market.
Understanding the current landscape
The Canada Mortgage and Housing Corporation (CMHC) forecasts a recovery in home sales and prices as lower interest rates and federal mortgage policy changes improve affordability. Six consecutive rate cuts by the Bank of Canada have already eased borrowing conditions, and further reductions are expected in 2025.
While these are positive signals, economic risks remain. A potential trade war between Canada and the US could stall growth, disrupt investment confidence, and prolong housing market recovery. If high tariffs are imposed, the resulting inflation could prompt the Bank of Canada to cut rates further to stabilize the economy. On the other hand, if tariff impacts are minimal, better financing conditions could accelerate homebuilding and increase accessibility to homeownership.
Despite potential challenges, the CMHC report predicts the combination of lower borrowing costs and recent mortgage rule changes—including a higher price cap for insured mortgages and extended 30-year amortizations for first-time buyers—will help unlock pent-up demand from those who have felt priced out of the market.
Millennials, especially first-time buyers, are driving housing demand, with a notable recovery expected in urban markets. While certain regions, like Ontario and B.C., may see more muted sales activity due to affordability challenges, markets in Alberta and Quebec are expected to experience higher-than-average price growth and strong transaction volumes in the coming months.
Key challenges facing borrowers
While recent interest rate cuts may provide some relief, many Canadians are still facing significant financial strain. A recent TransUnion report highlights the ongoing impact of inflation, with 82% of Canadians citing cost of living as a top concern and 44% saying their finances were worse than expected in 2024. Rising debt levels and the high cost of living continue to squeeze household budgets. Limited savings and higher debt-to-income ratios are making mortgage qualification more difficult, particularly for Millennials and Gen X.
Adding to these challenges, the threat of US tariffs is creating uncertainty for the Canadian economy. The prospect of increased trade barriers has already contributed to a weaker Canadian dollar and declining consumer and business confidence. According to the Bank of Montreal, if the proposed tariffs remain in place for a year, Canada could face a mild recession. Reduced demand for Canadian exports, supply chain disruptions, and retaliatory tariffs from Ottawa may lead to higher prices for consumer goods, including essentials like groceries and vehicles.
For Canadian households, this economic strain could lead to increased unemployment and reduced disposable income, making it even harder for borrowers to qualify for mortgages or keep up with existing payments. Industries such as manufacturing, tourism, and transportation are particularly vulnerable to job losses, which may further reduce demand in sectors like hospitality and retail. As affordability pressures mount, prospective homebuyers and existing homeowners alike will need to navigate a more challenging borrowing environment.
Strategies to support clients
In today’s uncertain economic climate, a proactive approach is crucial. Your clients are overwhelmed with information—often conflicting—about economic conditions, government policies, and housing market trends. This information overload can lead to hesitation, confusion, and poor decision-making. As a mortgage broker, you play a key role in filtering through the noise, translating economic insights into actionable advice that aligns with each client’s financial goals. By positioning yourself as a trusted advisor, you can help clients cut through the confusion and reinforce your role as an essential financial partner. Here are key strategies to support your clients effectively.
Ensure a strong financial foundation
One of the most effective ways to set your clients up for success when applying for financing is helping them get their financial house in order well ahead of time. For those preparing to buy a home for the first time, that includes a plan to save for a downpayment.
Start by advising clients to focus on reducing outstanding debt and practicing good credit habits. Encourage them to pay bills on time and keep their credit utilization low—two critical factors that impact credit scores and the terms they’ll be offered by lenders.
It’s also crucial to help them create a realistic budget that factors in the mortgage payments they anticipate, as well as other living expenses. Emphasizing the importance of and reducing unnecessary spending can free up resources and make it easier for them to manage future mortgage payments.
Equally important is counselling against overextending on credit in the short term, which could negatively impact their debt-to-income ratio and limit their ability to handle unexpected expenses once they’ve secured their home purchase.
Establish and nurture strong lending partnerships
Particularly in uncertain times, building and maintaining strong lender partnerships is essential to ensuring borrowers have more options and a better chance of success with their applications. These relationships—particularly with Brokerage Relationship Managers (BRMs)—are key to building trust and ensuring smoother deal flow, especially when facing the complexities of a shifting market. By nurturing these relationships, you can help clients navigate market challenges more effectively and secure the right financing solutions.
During uncertain times, brokers often carry the weight of their clients’ anxieties, and the pressure to deliver can lead to stress. While it’s easy to communicate with your BRM only when onboarding new clients or dealing with challenges, maintaining proactive, open lines of communication can make all the difference. BRMs are your go-to allies for understanding how to structure deals that meet your clients’ needs, especially in a more complex lending environment. By working collaboratively with your BRM, you’ll not only gain insight into better mortgage options for your clients but also foster a relationship that can help ease client worries and deliver more successful outcomes.
Understand the story and present a winning deal
To maximize the chances of securing mortgage approval for your clients, it’s crucial to provide as much detailed information as possible when submitting a deal. Beyond financials, the narrative you provide is key—lenders often seek mitigating factors that make an application more viable. A comprehensive rundown of your client’s financial situation and needs helps lenders assess the full picture, including their ability to manage the loan and any compensating factors that strengthen the application.
Also, by discussing the deal with your BRM before submitting, you can present a complete picture of your client’s situation and help them identify potential solutions. You might be surprised at how much of a difference it can make to provide this context. Details such as the borrower’s current circumstances, financial challenges, and any steps they are taking to improve their situation can significantly boost their chances of approval.
Expand your offerings
Partnering with trusted private mortgage lenders is also key to helping clients navigate market uncertainty. As traditional lenders tighten their criteria, many borrowers face challenges securing financing through conventional channels. Private lenders often have more flexible underwriting criteria, which can be advantageous for clients who may not meet the rigid requirements and stress tests of traditional financial institutions.
Private lending expertise allows you to navigate and address complex situations, providing clients with the guidance and confidence they need. Having access to the full spectrum of lending options enables you to serve a broader client base and provide more customized mortgage solutions. Overall, building this expertise ensures you can deliver the right solutions, expand your client base, and strengthen your reputation as a trusted advisor in uncertain times.
Strengthen client communication: Be proactive, accessible and responsive
In times of uncertainty, clear and consistent client communication is vital. Regular contact—whether it be through newsletters, webinars, or one-on-one consultations—ensures that clients stay informed about market shifts and understand how these changes impact their mortgage decisions. By simplifying complex economic trends, you help clients feel more confident and secure in their financial choices.
Being proactive, accessible, and responsive is key to maintaining strong communication with your clients. Don’t just wait for them to reach out—make the effort to keep them in the loop. Following up with helpful updates, market tips, or financial advice at the right moment will keep you top of mind without overwhelming them.
CMI: Your trusted partner in uncertain times
Ultimately, mortgage brokers are more than facilitators of transactions; they are trusted financial partners who help clients navigate uncertainty with confidence. By providing expert guidance, leveraging market insights, and offering personalized solutions, brokers can empower clients to make informed decisions that align with their long-term financial goals. As the mortgage industry continues to evolve, brokers who prioritize knowledge, adaptability, and client-focused service will be best positioned for success.
CMI remains committed to supporting you with the insights, tools, and private mortgage solutions you need to serve your clients effectively in any market conditions. Contact us today to learn more.
