2025 Mortgage Market Predictions: 5 Key Trends to Watch
The Canadian mortgage market is expected to experience significant changes in 2025, driven by various factors such as interest rates, government policies, and consumer behavior. Robert McLister, a mortgage strategist and interest rate analyst, has identified five key trends that will shape the mortgage market in 2025.
1. Loan-to-Income Ratios Will Come Under Scrutiny
As debt-service ratios remain near record levels, lenders will be more cautious when approving mortgages. This may lead to stricter loan-to-income ratio requirements, making it harder for borrowers to qualify for a mortgage. McLister expects that many consumers will need to find cheaper digs, leading to an increase in demand for housing outside of big city cores.
2. Switch Volumes Will Surge
Payment shock is anticipated when Canadian mortgagors renew their mortgages this year, with most facing rates 200+ basis points above their previous deals. In response, borrowers will comparison shop mortgage rates more aggressively, and many will exploit new rules that permit borrowers to switch lenders without having to pass the federal mortgage stress test.
3. Cross-Sale Will Drive Rate Competition
Deposit-taking lenders have been willing to sacrifice upfront interest revenue in hopes of cross-selling other financial products. This trend is expected to put a competitive squeeze on lenders that don’t have other financial services to sell (a.k.a. ‘monoline’ lenders).
4. Debt-Loaded Consumers Will Need Cheaper Digs
With non-mortgage debt loads ballooning year-over-year, many consumers will need to find cheaper housing options. This may lead to an increase in demand for homes further from big city cores, as work-from-home and hybrid work arrangements become more common.
5. Interest Rates Remain a Wildcard
Interest rates remain a huge wildcard for 2025, making it difficult to predict the strength of the real estate market. McLister notes that only one thing is certain: 2025 will bring plenty of surprises.
In conclusion, the Canadian mortgage market in 2025 is expected to be shaped by these five key trends. Lenders and consumers alike must adapt to these changes, which may lead to increased competition for lenders and more affordable housing options for borrowers.
Recommended Reading:
- The best mortgage rates in Canada right now
- Will mortgage rates keep drifting lower?
- Robert McLister’s insights on the Canadian mortgage market
Mortgage Rates Chart:
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Please note that this article is for informational purposes only and should not be considered as investment advice. It’s essential to consult with a financial advisor or expert before making any investment decisions.
About Robert McLister:
Robert McLister is a mortgage strategist, interest rate analyst, and editor of MortgageLogic.news. He can be followed on X at @RobMcLister.
Disclaimer:
The rates displayed in the chart are updated by the end of each day and sourced from the Canadian Mortgage Rate Survey produced by MortgageLogic.news. Postmedia and Imaginative. Online Inc., parent of MortgageLogic.news, are compensated by certain mortgage providers when you click on their links in the charts.
Stay Informed:
To stay up-to-date with the latest news and insights on the Canadian mortgage market, follow Robert McLister on X at @RobMcLister or visit MortgageLogic.news.
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