“Mortgages have been harder, interest rates have been higher, stress tests have been higher, and people have been having their own personal grinds. Household debt has hit an all-time high, and the amount of savings has decreased since COVID peaks,” he said. “So we know households are going through a more difficult time and having a harder time qualifying for mortgages, even in St. John’s.
“More and more people are looking at brokers here. We’ve had a lot of demographics that still weren’t using mortgage brokers, particularly the older demographics and the baby boomers, and we’re having a lot of those conversations in 2023 where a 60-year-old might call me and say, ‘Hey, my nephew said I should go talk to a broker because I got my mortgage renewal and I haven’t seen a 6% rate in 20 years.’”
When there was little difference between the rates offered by big banks and those put forward by brokers, borrowers may have gravitated towards the larger financial institutions – but now “everybody is listening” to the broker argument, Jennings said, with a sizeable gap having opened up in many cases between the rates brokers can offer compared with those of the banks.
Tania Bourassa-Ochoa of CMHC highlights the challenges faced by Canadian mortgage holders, underlining the vulnerability of homeowners in the country.
— Canadian Mortgage Professional Magazine (@CMPmagazine) November 14, 2023
How are homeowners and buyers adjusting to higher borrowing costs?
Despite the challenges of 2023, the upcoming mortgage renewal wave is viewed as more of an inconvenience than a reason to panic by many Newfoundland homeowners, Jennings said, because their mortgage is in many cases much more affordable than elsewhere.
“Obviously there are some people going through a difficult time, but I pay a lot of attention to other Atlantic provinces and other provinces in general and I’m in awe because [in] real estate, the national average is still double what it is in Newfoundland, and these mortgages are expensive,” he said.