Having extra conversations around refinancing during renewals can pay off this year
For mortgage brokers looking to grow their business in 2024, taking renewal conversations to the next level – and offering a value proposition beyond that of their competitors – will be key components of a successful year.
That’s according to Chase Belair (pictured), co-founder and principal broker at the nesto digital brokerage, who told Canadian Mortgage Professional that those client touchpoints were a crucial way for brokers to make borrowers aware of other opportunities during the renewal process.
“One of those [next] levels is a refinance conversation, and there are mortgage brokers who are successfully able to help a borrower understand the value of a refinance at that moment in time and will find more success than the mortgage brokers who are just facilitating renewals upon request,” he said.
With the leading banks also competing with brokers to secure borrowers’ business upon renewal, some may choose at the last minute to match the rate a broker has secured for that borrower – meaning the broker ultimately loses the client.
In that case, the broker didn’t necessarily do anything wrong – but investigating the option of renewing while also looking into the client’s entire financial picture, and finding other ways to save money in the long run, can ensure the borrower is getting full value from the broker and ultimately choosing their business.
“A refinance can be for 100 different reasons,” Belair explained. “It’s important that every borrower has a chance to go through those reasons with a mortgage professional invested in their wellbeing as opposed to just someone saying, ‘Oh, you have a mortgage due for renewal? No problem. Here’s our best rate: do you want it? Yes or no.’ That’s hurting Canadians.”
Why diligence and patience are more important than ever for brokers
That coming surge of renewals has been a prominent discussion point in the industry in recent times – and with most borrowers renewing this year and into 2026 likely to face much higher rates than when five years prior, Belair said it’s incumbent on mortgage professionals to ensure they’re taking as proactive and diligent an approach to client welfare as possible.
“We always talk about how approximately $900 billion of mortgage money is coming due at higher interest rates than when they first started, meaning the mortgage balance should be smaller today than it was when they got the mortgage,” he said.
Sharon Davis of DLC BlueTree Mortgages WEST anticipates relief with potential rate cuts, fostering a traditional spring market.
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“But there’s a high likelihood that their mortgage payment is going to go up, even though the balance is lower. So many Canadians are going to experience payment shock – that’s discouraging. It’s going to take a lot of diligence and patience for mortgage professionals including nesto to make sure that we understand why and how it works.”
Lower savings, higher credit balances set to impact renewals in 2024
Another factor for the industry to keep in mind this year, he said, is the reality that many Canadians have depleted their savings accounts and utilized credit much more over the past two years amid affordability challenges and squeezed budgets.
That’s a further trend that’s likely to bring the importance of agents and brokers into sharp focus in 2024, he said, with some borrowers likely to face a difficult decision on renewal in light of their changed financial picture – and possibly having little option other than to renew with their existing lender.
“As great as it is to talk about the opportunity to help people renew mortgages at more favourable rates, I think we’re going to experience a little bit more of 2023’s phone calls and conversations where there are just so many people who want help, want advice, want to change mortgage companies – but they’re going to be unable to from a qualification perspective because of the depleted savings and the higher credit [balances],” Belair said.
“So it’s going to be a difficult year. There are tons of opportunities to renew mortgages, but it’s not going to be as simple as it was in 2019 and 2020. A lot of Canadians are in a much different financial position than they were previously, before the pandemic.”
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