From Low to High: Navigating Canada's Shifting Mortgage Landscape

[00:00:00] Welcome to the Canadian Real Estate Investor, where host Daniel Foch and Nick Hill navigate the market and provide the tools and insights to build your real estate portfolio.

[00:00:12] Welcome back to the Canadian Real Estate Investor podcast. Today we are cracking open CMHC's brand new fall 2024 residential mortgage industry report.

[00:00:25] A report packed with insights that could potentially shape the future of Canadian real estate.

[00:00:34] Yeah, I want you to imagine over a million Canadian mortgages renewing in 2025 with interest rates expected to be far higher than when those mortgages were originally signed.

[00:00:48] For some, this will mean a financial squeeze, the likes of which they've never felt before. But it doesn't really end there. Mortgage debt is at a record $2.2 trillion.

[00:00:59] And alternative lenders are beginning to creep up in market share. And although they're still pretty low, delinquency rates are also showing an unsettling rise, especially for non-mortgage debt.

[00:01:11] This episode isn't just for investors and homeowners, but it's for anyone curious about what's lurking beneath the surface of our housing market, what risks lie ahead and how the mortgage landscape is shifting.

[00:01:28] So join us as we dig into the highlights, reveal some of the hidden trends and explain what these insights could mean for the market and more importantly, for you.

[00:01:39] So Dan, let's dive into the data that's setting the stage for Canada's housing market in 2025 and beyond.

[00:01:48] More borrowers today are choosing short-term fixed rate mortgages, and we're going to break down the key findings to understand why that is.

[00:01:55] We're also going to discuss the growing role of these alternative lenders we mentioned and the potential vulnerabilities facing Canada's housing finance system.

[00:02:03] So there's a lot to unpack. We're going to get into it now.

[00:02:05] We're kind of going to break it into three major segments.

[00:02:10] The first one being trends in mortgage lending, followed by housing market vulnerabilities.

[00:02:18] And we'll finish up with predictions and strategies for 2025.

[00:02:23] So you're going to want to stick with us all the way to the end of the show here.

[00:02:27] And if you want more educational content, make sure you join our upcoming free webinar at realist.ca slash webinar.

[00:02:33] There's a link in the show notes.

[00:02:35] Okay. So the first segment, let's talk about recent mortgage trends here, Dan.

[00:02:42] Shorter mortgage terms are on the rise.

[00:02:45] Now, borrowers are opting for fixed short-term mortgages, and they're doing that because they have an expectation of lower rates in the future.

[00:02:54] Now, these mortgages accounted for over half, which equals to $24 billion out of the $43 billion of all newly extended mortgages by chartered banks.

[00:03:06] In contrast, the five-year fixed rates were much less popular, which only made up 12% of newly extended mortgages in 2024.

[00:03:15] Now, that is a huge shift away from the traditional five-year fixed rate, which was by far the most popular choice for Canadians for a long time.

[00:03:26] And the minimal rate differences that are driving this change, pricing on two to three and five-year fixed has been pretty tight.

[00:03:33] So people seem to be okay to pay a little bit of that premium.

[00:03:37] Now, according to CMHC, on average, the different rates differ by no more than 0.1% in the first seven months of 2024.

[00:03:47] So if you fall into this category of someone that has taken a shorter-term rate and it's coming up,

[00:03:55] or you are one of those people that took a five-year rate three, four, five years ago, and you have something coming up,

[00:04:02] or you are just in the market to buy an investment property anywhere in Canada, please reach out to the show.

[00:04:07] Dan and I love working with podcast listeners, no matter where you are in this big, beautiful country of ours.

[00:04:12] So it seems like there's a similar kind of trend where people are choosing these short-term fixed rather than variable rates,

[00:04:22] which is kind of surprising given that the variable would, you know, if people are anticipating more immediate rate cuts,

[00:04:32] the variable would technically be the right play, right?

[00:04:36] Like it would have the larger advantage if rates start declining.

[00:04:40] But people aren't choosing them.

[00:04:42] We're seeing a decline in variable rate mortgages down to 9% of total from 20% earlier in the year,

[00:04:49] which is showed in figure one of their report.

[00:04:53] The decline occurred, a lot of this is because it's more a pricing thing,

[00:04:59] where there's a premium on variable rates that's been increasing continuously in the first half of 2024.

[00:05:06] And this would indicate that lenders are anticipating additional rate cuts by the Bank of Canada in the upcoming year.

[00:05:12] And so they're pricing those rates a little bit higher, the spread on them a little bit higher.

[00:05:16] You know, before you could get like a, I don't know, your prime minus 90 or prime minus 100 bips

[00:05:21] when we were seeing everybody piling into the variable rates.

[00:05:24] And I think now you're kind of seeing like a prime minus 50 or 60 environment.

[00:05:28] I don't know.

[00:05:29] I'm not a mortgage guy, but I think that the expectations of Bank of Canada rate cuts

[00:05:35] are obviously influencing borrower choices,

[00:05:37] but it doesn't seem like the pricing environment is making it such that people are able to do that

[00:05:43] with the better product in the variable.

[00:05:46] So you don't, like we're not really getting direct exposure to what the Bank of Canada is doing right now.

[00:05:51] The market's still encoding a little bit of a lag, right?

[00:05:55] Everybody's getting a fix today and then they'll get that rate relief in three years

[00:05:59] or two or three years rather than immediately.

[00:06:03] Yeah.

[00:06:04] I mean, the only thing I'd add to that is I think, again, going back to the consumer sentiment piece,

[00:06:09] I think that so many people out there were just burned by variables that were the very correct choice for a little while

[00:06:18] and have just left such a bad taste in a lot of people's mouths

[00:06:22] that people are just opting for a bit more stability in their mortgage rate.

[00:06:27] Hence, the shorter term fixed kind of planning on, you know, gaming the market a little bit,

[00:06:34] anticipating further rates to come.

[00:06:36] Now, let's take a jump over to the alternative lending space, which has grown, right?

[00:06:44] Growth in the mortgage lending space by alternative lenders is once again,

[00:06:49] outpacing national mortgage credit growth in the first half of the year.

[00:06:53] However, their risk profile is also increasing.

[00:06:57] That's driven by higher delinquencies and foreclosure rates and a decrease in first lien mortgages.

[00:07:04] So more second mortgages, which would be a sign that people are using these to using this type of credit

[00:07:12] to kind of band-aid fix other financial stress in their lives.

[00:07:18] Yeah, this whole report almost reads like CMHC is a little bit worried about the alt market.

[00:07:23] Like, you know, as if they maybe know something or they're seeing delinquencies piling up

[00:07:28] or positions being taken by, you know, it doesn't have to be the whole market,

[00:07:32] but a player or some players in that kind of private or alt space that is, it's just, I don't know,

[00:07:40] the way the whole thing reads gives me a little bit of a weird vibe like they have some concerns here.

[00:07:45] The rhetoric and that tone has definitely changed as we've been following these reports closely over the last few years.

[00:07:51] That's for sure.

[00:07:52] Yeah, especially like I don't think that they don't seem exceptionally concerned in regards to delinquencies.

[00:07:57] And we're going to get to the delinquency side of things,

[00:07:59] but the way that they're framing kind of what's happening in the alt space is,

[00:08:04] it seems like they're cautiously monitoring it.

[00:08:07] But to give a little bit of context here, the big six banks held a market share of like three of every four mortgages in Canada prior to this reports.

[00:08:18] Well, I guess they're sorry, they still would.

[00:08:21] But what's happening right now is the share of newly extended mortgages was apparently only like 54%.

[00:08:28] So just over half rather than three quarters is what they typically were lending.

[00:08:34] So usually they had a much bigger market share than what they did before.

[00:08:38] And so these alternative lenders are really obviously playing a pretty significant role in keeping the market moving.

[00:08:43] Banks aren't lending a bunch right now and their pricing is not super competitive.

[00:08:46] Recent regulatory changes removing the stress test on mortgage switches, increasing the cap on insurable properties and allowing longer amortizations for insured loans could alter this stability in 2025.

[00:08:59] And they're kind of careful with the language.

[00:09:01] They didn't really say whether or not that was to the upside or the downside.

[00:09:04] So I mean, I think that they probably think it's going to create a little bit more heat in the market, but maybe a little bit more risk could come with that.

[00:09:11] Yeah, and I think it might be a double-edged sword, but basically a more competitive lending environment as a result of some of the policy changes we've seen, right?

[00:09:21] The removal of the stress test has led to some more switching from the B space to other spaces.

[00:09:30] And I might consider that a bit of a win for the consumer.

[00:09:35] Yeah, it would be a win for the consumer as long as people aren't getting pushed into alternative loans due to financial stress, like you mentioned before.

[00:09:43] And that could be the case.

[00:09:45] The AUM or assets under management of the top 25 mortgage investment corporations or mix in Canada increased by 4.9% year over year in the second quarter of 2024.

[00:09:56] And as you mentioned, that outpaced the growth in the national residential mortgage debt, which was of 3.5%.

[00:10:03] So again, these privates and mix are growing at a much faster clip than the remainder of the mortgage market.

[00:10:10] Yeah, interesting stuff.

[00:10:12] And again, an evolving story here, right?

[00:10:15] I think we're still in the early days of this happening here, Dan.

[00:10:18] So I mean, overall, this shift to the higher risk profile makes mortgages more accessible, but could also create more risk for the market in general, which actually is a great segment to the next piece that we're going to be covering from the CMHC report here, Dan.

[00:10:37] This next segment is risks and vulnerabilities in the housing finance system.

[00:10:42] And so they start off by talking about mortgage delinquency rates.

[00:10:45] The mortgage delinquency rate continue to rise from historic low levels in 2024.

[00:10:51] And now, you'll often hear mortgage delinquencies are up 40% or double digits of percents, but it reached 0.19%, so 19 basis points in the second quarter.

[00:11:04] So a fraction of a percent of mortgages are going delinquent.

[00:11:08] And allowances for expected credit losses both suggest that they expect this to continue through 2025.

[00:11:16] And there's a couple of really good charts on both of those, especially the allowance for credit losses with certain types of loans really illustrates when they have...

[00:11:31] So they have the delinquency rates, but then losses relative to outstanding debt.

[00:11:34] And it's kind of just been rising at a relatively steady clip.

[00:11:37] And so I don't think that this is over by any means.

[00:11:41] It's like, you know, we obviously still are below pre-pandemic levels.

[00:11:47] And probably the more important comparable is we're well below averages from the 1990s.

[00:11:51] Now, I will say it's definitely a different lending environment than it was then where, you know, banks are really giving people a lot to help make sure that if they're in financial stress that they can kind of get out of it.

[00:12:06] So I think that, you know, it makes sense to me that they're well below the averages of the 1990s.

[00:12:13] Yeah, I mean, I'd hope so as well.

[00:12:15] And more specifically on mortgage delinquency rates, we're seeing a gradual uptick from what were historical low levels.

[00:12:24] And there are a few key factors at play here, Dan.

[00:12:28] What would some of them be?

[00:12:30] Yeah, so the report shows that while delinquency rates are still relatively low, they're obviously on the rise.

[00:12:35] And as of June 2024, the overall mortgage delinquency rate stood...

[00:12:39] It was up about like, again, like three basis points.

[00:12:42] So like to 0.17% from 0.14%.

[00:12:47] Yeah, so incremental differences here.

[00:12:50] But what was driving those increases?

[00:12:52] Yeah, so the two main factors that they outlined were higher borrowing costs and elevated household debt.

[00:12:58] And when you look at the delinquencies by type of loan, it kind of starts to tell a bit more of a story.

[00:13:04] So they have like a chart that shows delinquency rates increasing for all credit products.

[00:13:08] And then that, you know, so you imagine, okay, every house has this like, let's call it a capital stack or this like bundle of debt that they use.

[00:13:15] And this chart shows auto, credit card and auto and credit card.

[00:13:19] Like auto just had this spike up from Q1 to Q2.

[00:13:22] Credit card's kind of been slowly grinding up.

[00:13:24] Like lines of credit, same thing, like less delinquency than credit card, but grinding up.

[00:13:29] Mortgage and HELOC, pretty flat, but they're slowly, slowly kind of creeping up.

[00:13:33] But like if you go down the lines in that chart, you know, the order in which people would go delinquent on those loans is probably the lines, right?

[00:13:44] Like somebody's probably, maybe they'd go credit card before a car because you need your car to get to work and stuff like that.

[00:13:49] But who knows?

[00:13:50] Maybe the credit card, not really because the minimum payment's much smaller, whereas like an auto loan's a pretty big payment on a monthly basis.

[00:13:56] And then again, you'd stop paying your line of credit, your mortgage, and then your HELOC.

[00:14:00] And so it's that whole pile of household debt with, you know, with interest rates climbing, many homeowners are facing larger mortgage payments, which can strain their budgets.

[00:14:10] The same thing is true for credit card payments, for lines of credit.

[00:14:14] These are all on floating rates, auto loans, et cetera.

[00:14:17] So you add that to the high levels of household debt that we're seeing across Canada.

[00:14:22] And this is where that financial stress really starts to pile up.

[00:14:24] Yeah, it's important to note that, well, this increase is concerning.

[00:14:30] We're still well below the delinquency rates that we saw during previous economic downturns.

[00:14:36] So for some context here, during the 2008-2009 global financial crisis, delinquency rates peaked at around 0.45%.

[00:14:47] So, you know, we were at 0.14% in 2023.

[00:14:51] Now we're at 0.17%, still a while away from that 0.45% of the greatest financial disaster that hopefully most of us will ever experience in our lifetime.

[00:15:03] Yeah, I mean, the GFC wasn't really that bad for Canada.

[00:15:08] So, you know, again, like, but the fact that we're below those, like, again, that would illustrate to me that we aren't really in a cause for concern.

[00:15:17] My fear is that there's probably this little bit of an artificial suppression going on where you have this, like, Canada mortgage charter, which we've done a whole episode on the show.

[00:15:27] You know, again, like, you know, you can call lenders, big six lenders with financial stress and stuff like that.

[00:15:35] And there's a lot more accommodation mechanisms for homeowners today than there was during the GFC and during the 1990s downturn.

[00:15:46] But to me, the trend is what we need to watch, right?

[00:15:49] If this gradual rise continues, and it could for a long period of time, especially as you have more people rolling over to more expensive debt, especially with so many mortgages up for renewal at higher rates in 2025, we could see these numbers climb even further.

[00:16:04] And that's why we really want to compare to the pre-pandemic environment where what were rates during that period of time?

[00:16:12] Yeah, so let's put some of these rates into perspective by, you know, using some of that historical data we have.

[00:16:19] So we'll compare them to historical levels and pre-pandemic benchmarks.

[00:16:26] Yeah, so as of November 2024, the Bank of Canada's policy rate stands at 5%, which is significantly higher than the pre-pandemic rate of 1.75 in January 2020.

[00:16:40] And sorry, that's your fixed mortgage rate, not your Bank of Canada policy rate.

[00:16:43] Yeah, exactly.

[00:16:44] And if we look back even further, we haven't seen rates this high since the year 2001.

[00:16:50] Now, during the 2008 financial crisis, rates dropped to then a record low of 0.25 where they then stayed there until the mid-2010s.

[00:17:05] Yeah, so, you know, and then during COVID, we went to that 0.25 or the 25 basis point, basically 0% rates.

[00:17:13] And now we're, you know, then we went up to 5% and now we're back at a 3.75% overnight rate.

[00:17:20] So 125 basis points from cuts there.

[00:17:22] And it's worth noting again, like going back as CMHC obviously has like a lifetime of data on this.

[00:17:28] In the 1980s, we saw rates as high as 21% during periods of extreme inflation.

[00:17:33] So while today's rates feel high to many, they're not unprecedented in the broader historical context.

[00:17:39] And honestly, like we're pretty much like right on what the historical average is.

[00:17:42] I think the historical average rate is like a 4.11%.

[00:17:47] And I think your five-year fixed rates are kind of in a comparable environment in like the fours.

[00:17:53] Yeah, yeah, that's exactly right, Dan.

[00:17:54] And the average five-year fixed mortgage rate today is around 4.5%.

[00:17:58] And compared that to 2.5% in early 2020, this increase represents a significant jump, of course, for borrowing costs for any homeowner,

[00:18:09] which most of you listening are well aware of because it's one of the major complaints we've been hearing for a few years now.

[00:18:16] Yeah, and so that comparison really highlights why so many homeowners already are feeling the pinch

[00:18:21] and why so many more could potentially feel the pinch.

[00:18:23] Maybe the Bank of Canada is incentivized to get rates a little bit lower by the time we get to that renewal wall,

[00:18:29] as a lot of people are calling it.

[00:18:31] So to kind of lessen the burden, lessen the financial stress that could happen as a result of that million plus renewals over the next year and even into 2026.

[00:18:44] Yeah, so let's talk about some of the biggest concerns that CMHC highlighted in this report.

[00:18:49] One of them being Canada's elevated household debt levels.

[00:18:54] Dan, this has come up multiple times on the show over the last several years.

[00:18:59] And for instance, like for every dollar Canadian makes, we owe $1.84 or $1.87, I believe.

[00:19:04] This is not a minor issue that can kind of be swept under the rug or kicked down the road.

[00:19:11] It's significant vulnerability for every Canadian and for our housing finance system as a whole.

[00:19:19] Yeah, so as you mentioned, like that $1.8 owed for every dollar made or 180% debt to income ratio gives Canada the highest debt to disposable income ratio of any G7 country.

[00:19:36] You know, higher than the US and Germany, which were both around 100%.

[00:19:40] And even like 100% to me is kind of like, you know.

[00:19:42] It's basically just a wash at that point, right?

[00:19:44] Well, it just means that you, yeah, like most people need to work an entire year and spend no money just to get out of debt.

[00:19:50] For every, yeah.

[00:19:51] So I guess the scary part is like for every dollar that somebody makes, they owe 180 in debt, right?

[00:20:02] Pretty messed up when you think about it.

[00:20:05] And of course, with interest rates at the current levels, the cost of servicing this debt has skyrocketed, making it even harder to pay off that debt.

[00:20:13] And the debt service ratio, which measures the proportion of income used to pay interest in principle on said debt, has again climbed to nearly 15%.

[00:20:26] Yeah, so to put that into perspective, this would mean that the average Canadian household is spending about 15 cents out of every dollar earned just to service their debt.

[00:20:35] This leaves less money for other expenses and savings, which are necessary for an economy to grow.

[00:20:41] And that creates a bit of a precarious financial situation for many people, but also for the economy as a whole, if you add all of said people together.

[00:20:48] Yeah, and the impact of this high debt load is far reaching.

[00:20:52] Now on an individual level, it means households are living paycheck to paycheck.

[00:20:58] And that doesn't just mean the lower income or starting out kind of thing.

[00:21:05] This goes for higher income people as well.

[00:21:07] And unfortunately, that leaves a little buffer for any unexpected expenses, right?

[00:21:14] Even something happens with the car or some health issue or whatever it may be, right?

[00:21:19] A roof goes, something with your house happens.

[00:21:22] And then that's just like on an individual basis.

[00:21:25] Let's look at a broader scale.

[00:21:27] What happens if we have a big economic shock, something happens and people live in a paycheck to paycheck?

[00:21:32] That just puts people in a really tough situation.

[00:21:35] Yeah, I mean, this is where, and again, like CMHC mentions this in the report, these high debt levels make the economy more vulnerable to economic downturns.

[00:21:44] So, you know, right now the biggest thing that I think most economists are paying attention to in Canada is unemployment.

[00:21:51] And if you start seeing a significant rise in unemployment or a sharp drop in housing prices or the stock market or something like that, where you see wealth destruction happen pretty quickly, which isn't unheard of in times like these.

[00:22:02] Especially like with the stock market absolutely ripping and unemployment rising in Canada and the economy not doing exceptionally well.

[00:22:09] Because so many people have so much debt and they're probably living paycheck to paycheck, making those minimum payments.

[00:22:16] You're seeing delinquencies rising.

[00:22:18] Again, not everyone, but enough people that can cause a really, you know, scary wave of defaults, which leads to foreclosures and more stress like where, you know, it just is a negative feedback loop, right?

[00:22:33] Yeah.

[00:22:34] We don't like that negative feedback loop idea.

[00:22:38] So when we look ahead to 2025, this high debt load combined with potentially higher interest rates could lead to increased financial stress for many Canadians across the country.

[00:22:51] It might result in reduced consumer spending, which would have an overall slowdown effect on the economy and economic growth, right?

[00:23:01] People aren't spending money.

[00:23:02] Everyone's being a little more cautious.

[00:23:03] You're living paycheck to paycheck.

[00:23:05] You're trying to save every dollar you can to not only pay off that debt, but to prepare for those emergencies.

[00:23:10] Well, then people stop going out and buying things and spending money in the economy.

[00:23:14] Hence why we've seen less employment and issues in that sector.

[00:23:18] Hence that negative feedback loop that you were just talking about, Dan.

[00:23:22] Yeah.

[00:23:23] And for the real estate market specifically, we might see more forced sales if homeowners struggle to keep up with mortgage payments.

[00:23:28] And that could potentially put downward pressure on home prices in some markets, which is great if you're an investor, say, on the sidelines in acquisition mode or waiting to buy your house.

[00:23:39] But it sucks for, again, the majority of Canadians, 66% of Canadians who own their houses already or investors who already own properties who obviously have an incentive for those values to stay up.

[00:23:52] Maybe we're thinking about refinancing or whatever.

[00:23:55] So it's a bit of a double-edged sword in that regard.

[00:23:57] For sure.

[00:23:58] It is a double-edged sword.

[00:23:59] And overall, it's a very complex situation that kind of underscores the importance of responsible borrowing and the need for policies to promote financial stability, right?

[00:24:10] Let's really hone in on that term, responsible borrowing, which was completely ignored, I think, for a few years by a large portion of R2 Industries, Dan.

[00:24:19] And by large, you know, I think greed got the better of a lot of people.

[00:24:23] So as we move into 2025, it's crucial for both policymakers and all of you, the individual Canadians that listen to this show, to keep a close eye on these debt levels and to take steps, whatever they may be, to mitigate those risks.

[00:24:43] Yeah.

[00:24:44] So maybe let's just personalize this a little bit.

[00:24:49] Ooh, I like it.

[00:25:19] There we go.

[00:25:20] Giddy up, baby.

[00:25:21] You don't need to plan.

[00:25:22] So let's think about what downside risks exist.

[00:25:25] And this is, again, based on CMHC's research, you know, to see, okay, do I need to manage this?

[00:25:31] Do I need to recalibrate my portfolio a bit?

[00:25:33] Is there an opportunity here?

[00:25:34] Maybe I want to start, you know, piling up some dry powder to make some acquisitions because I'm seeing opportunity.

[00:25:39] I'm seeing some risk ahead and maybe some better deals ahead, right?

[00:25:42] So starting with-

[00:25:44] Speaking of dry powder story, Dan, but dry powder, I don't know if you saw it today, but I think Warren Buffett and Berkshire Hathaway posted they've got now more dry powder, a.k.a. cash, waiting to be deployed on the sidelines than ever before.

[00:25:57] Yeah, I think it's like the biggest cash position anyone's ever had.

[00:26:00] Ever had.

[00:26:01] And there's like that Buffett indicator, like, chart.

[00:26:05] So, and it basically warns that, like, it's basically just flashing red, right?

[00:26:10] It just would show that it's a valuation multiple used to assess basically how expensive or cheap the aggregate stock market is based on Buffett-esque fundamentals.

[00:26:20] So I would call that probably a pretty decent under-red metric.

[00:26:23] Guy knows a thing or two.

[00:26:25] Yeah.

[00:26:25] Yeah.

[00:26:25] So anyway, sorry, back to-

[00:26:27] No, yeah, it's all good.

[00:26:28] The financial stresses here.

[00:26:29] Yeah, so I'll start with the individual households and then you can kind of dive into the broader economy.

[00:26:34] So look, the impact could be significant for individual households.

[00:26:36] Many families could find themselves allocating a larger portion of their income to mortgage payments, which leaves less for other essential savings.

[00:26:43] And so again, if you're planning on saving more money or taking a vacation or whatever, just keep that in mind.

[00:26:50] Like really think about today for your household budget for the next year, how much more money am I going to be spending on interest when I have to renew in 2025 versus my current rate?

[00:26:59] So that would lead to reduced spending, right?

[00:27:02] Financial squeeze could lead to decreased consumer spending affecting local businesses.

[00:27:07] So that's kind of the knock-on effect.

[00:27:08] And then that would slow economic growth.

[00:27:10] And amplifying that is the fact that we're going to see a decrease in Canadian population growth.

[00:27:15] And apparently the government says they're going to decrease the Canadian population in its entirety, which I don't think they'll actually be capable of executing.

[00:27:22] So I don't know if we necessarily need to worry about that one.

[00:27:24] Maybe don't use decreasing population and executing in the same sentence.

[00:27:31] So the next kind of phase that would happen is your forced sales, right?

[00:27:36] So in more extreme cases, some homeowners or investors, and you're starting to see this.

[00:27:40] Like I've been chronicling the power of sale trend for a long time.

[00:27:44] And you could see massive increases in power of sales.

[00:27:48] So some homeowners might be forced to sell properties if they can't keep up with the higher payments.

[00:27:54] So I don't think that that trend that I mentioned in power of sales, imagine like all of the people, you have a much smaller portion renewing mortgages today than you do or in 2024 than you do in 2025.

[00:28:07] Now in 2025, they might be renewing at slightly lower rates because the Bank of Canada has put some work in between now and then.

[00:28:13] But you're just going to get more people.

[00:28:16] You have a higher volume of people now exposed to this financial stress and reduced spending.

[00:28:20] And that could potentially increase the amount of inventory on the market.

[00:28:25] And then you also just get, and that's like if the bank actually has to force a sale through power of sale or foreclosure process.

[00:28:32] There's also just non-forced sales.

[00:28:34] So there's a potential from pent up supply from people who can't afford to hang on.

[00:28:39] I mean, statistically, like especially if everybody who bought in the COVID era rates was buying with a fixed mortgage because anybody variable has already been impacted by it.

[00:28:50] But so anyone fixed statistically, they're most likely to sell when they're up for renewal, right?

[00:28:57] Because then they don't have to pay their penalty, et cetera.

[00:29:00] Like if you're in a fixed rate, there's costs associated with selling.

[00:29:02] And so it would not be unheard of to imagine like some of those people might just be waiting for that because they've said, ah, you know, prices are kind of stable.

[00:29:09] I don't think my property is going to go down that much in value.

[00:29:11] So I'll just wait and I'll sell it when I'm up for renewal so I don't have to pay that penalty.

[00:29:16] So there is a potential for a pent up supply from people who can't afford to hang on.

[00:29:21] So I think like to me, those are really the summary of the risks, the downside risks that, you know, an investor could potentially capitalize on.

[00:29:28] Financial stress, reduced spending for sales and potential pent up supply.

[00:29:32] Yeah.

[00:29:33] And like you have like you kind of put like the non-forced sales, I'd almost call them like soft forced sales, right?

[00:29:39] Those aren't, it's not the bank being like, hey, you got to sell us because you can't afford it.

[00:29:42] But it's people come into the harsh reality themselves.

[00:29:45] And I've had a lot of these unfortunate conversations recently.

[00:29:48] People bought something, you know, some totally random numbers, but they bought something for $650,000.

[00:29:53] You know, at one point it was worth $900,000 and it's kind of got back down to that $650,000, $700,000 mark.

[00:30:00] And over the years, you know, at one point they could have made $250,000 on it.

[00:30:04] And now when they're planning on selling it because, you know, they're essentially being soft forced to,

[00:30:09] they're not going to white knuckle through it for whatever reason that may be.

[00:30:13] You know, they're really only looking at a little bit of a lift, if any, after you've paid out your commissions and land transfer and all that kind of stuff, right?

[00:30:21] So anyways, well said, Dan, crucial points for individuals.

[00:30:26] But let's look at how this could affect the broader economy and overall economic stability.

[00:30:33] So let's start with the housing market.

[00:30:36] Volatility is a word that has been used to describe it for several years now.

[00:30:40] And I will use it again.

[00:30:42] And if we see significant number of forced sales that you mentioned, it could lead to downward pressure on home prices,

[00:30:48] which could potentially trigger a broader economic correction.

[00:30:53] Outside of the housing market, let's look at the banking sector, right?

[00:30:56] We only have six big banks here.

[00:30:58] An increase in mortgage defaults could put stress on those big banks,

[00:31:03] potentially leading to tighter lending standards, which we've already seen,

[00:31:09] and reduced credit availability, which we've already seen.

[00:31:11] Now, is this just going to be exacerbated as these statistics get worse?

[00:31:16] You know, add those two together, housing market and banking sector,

[00:31:20] and we could be looking at an overall economic slowdown, reduced consumer spending,

[00:31:24] combined with potential instability in the housing and banking sectors.

[00:31:28] This could contribute to an overall economic slowdown.

[00:31:33] Yeah, I guess the question becomes like,

[00:31:36] I don't think anybody's exceptionally worried about the health of Canadian banks.

[00:31:40] I mean, they're pretty good at making money.

[00:31:42] You know, I'm personally not,

[00:31:43] but like I don't think we are at risk of some actual financial system issue.

[00:31:47] But I think that what it ends up leading to is that, like you said,

[00:31:50] that reduced credit availability or credit contraction.

[00:31:53] So you see just banks lending less and less money.

[00:31:55] If they're taking on too much risk and their existing book isn't doing well,

[00:31:58] they're not going to expand the book into the same market, right?

[00:32:00] And keep exposing themselves to that market.

[00:32:03] So I think that, you know, in that regard,

[00:32:04] it's a bit of a domino effect that could kind of ripple through various sectors of the economy.

[00:32:08] If your mortgage lending book is doing poorly and you can't turn over capital,

[00:32:12] then you're maybe going to lend a little bit less in agriculture,

[00:32:15] to businesses or whatever, right?

[00:32:17] And that kind of really underscores the importance of these proactive measures

[00:32:21] by both policymakers in the government and monetary policy.

[00:32:24] Like, so your central bank and fiscal policy with the government

[00:32:26] and just regular individuals to do things to mitigate these risks

[00:32:33] or at least think about, observe these risks and anticipate them

[00:32:37] as we approach 2025 and all of the themes that CMH is mentioning in this report.

[00:32:42] Yeah. Okay. So you mentioned 2025.

[00:32:45] Let's talk about 2025.

[00:32:46] As we look ahead, we're facing a significant milestone in the mortgage landscape, right?

[00:32:53] We've all heard about the renewal wall and all these things,

[00:32:57] which are made out to be some big economic or potential economic disaster.

[00:33:02] For some reason, I always think like Game of Thrones,

[00:33:04] like the wall kind of thing.

[00:33:06] I don't know, just because that was a bit of a disaster in that show as well.

[00:33:09] But if you haven't watched that, you don't know what I'm talking about.

[00:33:11] So we will continue.

[00:33:13] The CMHC report highlights a staggering 1.2 million mortgages.

[00:33:19] So 1.2 million different individual mortgages that are set to renew next year.

[00:33:23] And I actually think, correct me if I'm wrong here, Dan,

[00:33:25] but I think 2026 is actually supposed to have even more renewals than 2025.

[00:33:29] No, I think 25 is bigger than 26.

[00:33:32] 25 is bigger than 26? Okay.

[00:33:33] Now, what's particularly noteworthy is the vast majority of these mortgages,

[00:33:38] about 85% were initially contracted when the Bank of Canada's interest rate was at a

[00:33:44] below 1% or at around the 1%.

[00:33:48] So Dan, that's a massive number of homeowners potentially facing a very serious financial

[00:33:55] adjustment in their lives.

[00:33:57] Let's break down what this could mean for the average borrower here.

[00:34:03] Yeah.

[00:34:03] So the situation could create the perfect storm of financial stress for many Canadian homeowners.

[00:34:09] You know, prices have gone down from then since then.

[00:34:12] So if you bought during that period of time, you're in a bad equity position.

[00:34:15] Like Nigel from Veritas actually explained this to me very well.

[00:34:18] And I wish I could just get him on the show to explain it.

[00:34:20] But basically, you know, he feels that mortgages in Canada are equity backed.

[00:34:25] They're not income backed, right?

[00:34:26] So if you still have equity in your house, you can always borrow more money to solve the problem.

[00:34:31] And so, but if you bought your house in 2021, you might have maybe not no equity, but you'll

[00:34:38] have a reduced equity position from, you know, if you bought at those record high prices 2021

[00:34:43] to like early 2022.

[00:34:46] At the same time, you know, the reason prices were so high is because rates were extremely low and the market

[00:34:51] became irrational.

[00:34:52] And so the mortgage, those who secured mortgages at historically low rates during that pandemic

[00:34:57] are now facing drastically different interest rate environment.

[00:35:00] So the jump from, you know, the kind of what was that?

[00:35:05] Like the lowest fixed rates were like a 1.99% fixed, I think, you know, 2% interest rate environment

[00:35:11] to today's rates, which are hovering in like the fours or fives is like a doubling of your

[00:35:16] interest payment.

[00:35:17] And so that's a doubling of your capital costs.

[00:35:19] That's a significant increase in monthly mortgage payments for people.

[00:35:21] And so it's worth discussing while HELOC and mortgage delinquency is pretty low on that chart

[00:35:28] that shows mortgage delinquency.

[00:35:30] CMHC makes note of delinquencies in other credit types as well, Nick.

[00:35:35] And I know I mentioned this earlier, but if you want to read the stats, because it's pretty

[00:35:38] interesting.

[00:35:39] Yeah, it is interesting and concerning at the same time.

[00:35:43] So let's look at auto loans.

[00:35:45] Delinquency rates for auto loans have increased to 2.1% in Q2 of 2024.

[00:35:50] That's up one from 1.8% earlier this year.

[00:35:53] Credit card delinquency has also risen to 3.5% up from 2.9% in the same quarter of last year.

[00:36:02] So again, not huge jumps, but jumps in the wrong direction nonetheless.

[00:36:06] And then lines of credit delinquency rates for lines of credits have climbed to 1.2% up from

[00:36:12] 0.9% in the same time last year.

[00:36:15] So incremental basis point difference here, incremental percentage point difference here,

[00:36:21] but still everything seems to be slowly going in the wrong direction.

[00:36:25] Yeah, and I think these increases in non-mortgage credit delinquencies are often leading indicators

[00:36:30] of obviously broader financial stress among households, especially when you see those lines

[00:36:34] of credits, because if people are burning through those to kind of like maybe pay the mortgage,

[00:36:38] like again, people, Canadians love paying their mortgages.

[00:36:41] So that's going to be the last thing that they stop paying.

[00:36:43] So if they've burned through, oh, I can't pay my car.

[00:36:46] Now I can't pay my credit card.

[00:36:47] Now I can't pay my line of credit, you know, and then, you know, by the time they've done

[00:36:51] all of that, their credit's destroyed.

[00:36:53] So there's really no way for them.

[00:36:54] Nobody's staying, even a private lender probably isn't sitting there standing,

[00:36:57] throwing them a life raft.

[00:36:59] And the few that are, you're seeing that showing up in the data point of people,

[00:37:04] of the increases in alternative lending space, right?

[00:37:08] So again, like you said, that 1.56 to 1.7% increase in credit cards and lines of credit

[00:37:15] delinquency is, look, it's obviously pretty meaningful here.

[00:37:19] As consumers are struggling with these smaller credit products, this could potentially lead

[00:37:25] to difficulties in managing larger debts like mortgages in the near future.

[00:37:30] So why don't we do a quick dive into kind of just like the difference between this alternative

[00:37:39] lending space?

[00:37:40] Because I think like, you know, a lot of people talk about the private loans and stuff like

[00:37:43] that as an opportunity.

[00:37:44] A lot of people use them as if they're equity, they go to like a high, you know, high leverage

[00:37:48] and you're starting to see more and more people get into that.

[00:37:50] So we'll just try and rip through this really quickly.

[00:37:53] Yeah, for sure.

[00:37:54] The, you know, it's kind of a fascinating two tales of traditional lending that we saw

[00:37:58] in 2024, Dan, but break down for me what happened in Q1 versus Q2.

[00:38:05] Yeah.

[00:38:06] So basically, you know, in Q1, we saw traditional lenders engaging in what, or I mean, maybe not

[00:38:13] even Q1, but earlier you were seeing traditional lenders engaging in what would be considered

[00:38:16] maybe a little bit more riskier.

[00:38:17] Like their risk appetite was a little bit higher.

[00:38:19] So they were taking on higher loan to value ratios.

[00:38:22] They were taking on a little bit more elevated debt service ratios before unemployment started

[00:38:26] rising forth.

[00:38:27] You know, things started breaking in the Canadian economy.

[00:38:29] Then borrowers were committing a large portion of their income to debt payments, which is

[00:38:33] a bit of a red flag.

[00:38:34] And then, you know, moving forward, we kind of moved to this new environment where banks

[00:38:38] want to be the less risky lender in the market.

[00:38:40] So lenders started requiring larger down payments, you know, trying to reduce their exposure

[00:38:45] to potential defaults.

[00:38:46] You're seeing a lot of policy measures being, you know, trying to amplify insured lending

[00:38:53] origination, which to me illustrates, you know, obviously banks don't take a ton of risk

[00:38:57] when the loans are insured and bought off of them by CMHC and put into mortgage-backed

[00:39:01] securities.

[00:39:01] So again, they're trying to get a better looking book here, better debt service ratios,

[00:39:06] lower loan to value ratios, better loan to income because they have that new off fee

[00:39:09] thing where their whole portfolio can't be more than 4.5x income.

[00:39:14] So if you take all of the income of all of your borrowers and then all of the loans of

[00:39:19] all of your borrowers, you divide the loans by the total income.

[00:39:23] And that number has to be, I think it's the 4.5%.

[00:39:25] So, I mean, there's a lot like, you know, tightening monetary policy concerns about economic

[00:39:30] stability and some internal risk assessments have made them kind of want to be a little bit

[00:39:36] more safe.

[00:39:37] And this, but this has kind of led to a significant trend in the mortgage space, which was a bit of

[00:39:42] a shift in the uninsured space, right?

[00:39:45] So they were like 74% of residential mortgages before.

[00:39:48] And as property values start to increase, more mortgages exceed that $1 million threshold

[00:39:56] in mortgage insurance.

[00:39:57] And I guess, you know, prices weren't able to correct enough.

[00:40:01] So that would place properties into the uninsured category.

[00:40:05] And CMHC is actually extending that $1 million to 1.5, not just like 1.25, they went all the

[00:40:10] way to 1.5 to accommodate for that starting December 15th.

[00:40:14] So that's obviously going to change.

[00:40:15] And you're seeing more and more buyers opting for larger down payments to avoid insurance

[00:40:19] premiums, which is interesting.

[00:40:20] And we did some interesting math on it, but maybe we'll skip that and we'll do it another

[00:40:24] time.

[00:40:25] But I thought it was...

[00:40:26] Yeah.

[00:40:26] No, it is.

[00:40:27] It's fascinating.

[00:40:27] But this is the, you know, the larger down payments.

[00:40:30] And I can say this, we see this so often, the larger down payments to avoid that premium.

[00:40:34] That's where big bank number seven comes into play.

[00:40:38] Okay.

[00:40:38] And I'm not talking about a bank.

[00:40:40] Unfortunately, everyone has access to this is the bank of mom and dad where, you know,

[00:40:44] mom and dad come in and whether it's a gifted inheritance early or whatever it may be,

[00:40:50] this is, you know, hey, you were going to get this money in 5, 10, 15, 20 years, whatever,

[00:40:55] or for the wedding or for whatever it is, but use it to buy this house now instead.

[00:41:00] So we don't have to give CMHC money.

[00:41:02] Yeah.

[00:41:02] I mean, basically, like I'll just explain it quickly.

[00:41:05] I won't do all the math, but like I calculated 5% down payment with CMHC insurance.

[00:41:10] And basically you pay 100K in interest in the first five years, the remaining 25 years, assuming

[00:41:15] you're at 4.5% the whole time, you pay 231,000.

[00:41:19] So your total interest over 25 years is 332,700.

[00:41:24] But with, you know, if you were to do the same property, again, that was a 500K property.

[00:41:28] If you were to do that with 20% down in the first five years, you'd pay 92,000 and then

[00:41:34] you'd pay 195,000 in interest over the remaining 20 years.

[00:41:38] So you're paying about 50K less interest, which, so, you know, or sorry, you're paying,

[00:41:44] yeah, you're paying about 50K less interest with scenario two, but you have to put 75K less

[00:41:52] into the house.

[00:41:53] Right.

[00:41:53] So obviously people are, yeah.

[00:41:55] So people are, yeah.

[00:41:56] It's a bit of a substantial, I mean, Hey, we just.

[00:41:58] Well, that's why people are doing it, right?

[00:41:59] Yeah.

[00:42:00] Like they don't, you know, and most people want to, they'd rather pay all that money

[00:42:02] out over the long time.

[00:42:04] 75K is no joke, man.

[00:42:05] We just found that property in Winnipeg for $100,000 all in.

[00:42:10] So, you know, take that 75, you're going to save and go buy a property in Winnipeg.

[00:42:16] Dan, what do you think?

[00:42:16] Do we jump to segment number four here and get some more predictions and strategies for 2025?

[00:42:22] Yeah.

[00:42:23] Okay.

[00:42:23] So I'll start things off here.

[00:42:24] The Bank of Canada's potential rate cuts in 2025.

[00:42:28] Again, we've seen four rate cuts, 325s, 150, you know, the jumbo 50.

[00:42:33] We're likely going to see another one by the end of the year.

[00:42:36] And there's several more predicted for 2025.

[00:42:38] Now that could significantly influence borrowers behavior.

[00:42:42] Remember interest rates take 18 months to really work their way in or out of an economy.

[00:42:47] So all this data is lagging.

[00:42:49] And the most powerful thing that's going to happen is its effect on consumer sentiment.

[00:42:52] Now, shorter terms may remain popular.

[00:42:56] Shorter term mortgages may remain popular as borrowers anticipate further rate decreases,

[00:43:01] which is going to allow them to potentially refinance at lower rates sooner.

[00:43:06] And variable rate mortgages might see a resurgence in popularity if borrowers expect rates to keep

[00:43:11] falling, right?

[00:43:12] We get it now, pay a little bit of premium now, but we ride the wave down.

[00:43:16] And some borrowers may opt for longer terms if they believe the rates have, you know, quote

[00:43:23] unquote, bottomed out, seeking to lock in a favorable rate for longer.

[00:43:28] So overall, the trend towards shorter terms is likely to persist in the near term.

[00:43:34] But borrower strategies may diversify as the rate environment continues to evolve.

[00:43:41] Yeah.

[00:43:41] So I guess then like want people to set realistic expectations for mortgage rules with higher rates

[00:43:46] in 25, there's a couple strategies that you could think about, right?

[00:43:49] So you obviously want to shop around for the best rates.

[00:43:50] And so you can go to a broker, you can be your own broker and go to all the banks.

[00:43:55] You know, it's hard to know all of the information.

[00:43:57] There's a ton of information online.

[00:43:58] There's a ton of good websites, right?

[00:44:00] Lots of friends of the show who are publishing rates.

[00:44:03] You know, a lot of people are tempted and a lot of people get pushed into this position

[00:44:07] of automatically renewing with your current lender because, you know, you might not qualify

[00:44:11] and you just have to check the box.

[00:44:13] But because they've alleviated the stress test, you know, there's some more competitiveness

[00:44:17] in the space and lenders definitely are competing because they're not getting new mortgages from

[00:44:21] the acquisition side.

[00:44:23] And so, yeah, so they're going to try and make up the difference there.

[00:44:27] Consider a blend and extend option.

[00:44:28] If you're in a while some time away, you could ask your lender about blending your current

[00:44:31] rate with a new rate and extending your term.

[00:44:35] Explore refis if you have equity, you know, consolidate high interest debt.

[00:44:38] If you're one of those people, maybe you haven't got to the house yet, but you have some equity

[00:44:41] and, you know, you're behind on some other stuff.

[00:44:44] Usually, we did a great episode with Scott Terrio on this, but like usually not something

[00:44:48] we necessarily recommend.

[00:44:49] Debt shouldn't be a solution for debt, but, you know, there are like-

[00:44:52] Desperate times, call for desperate measures, amigo.

[00:44:54] Well, look, I mean, going to cash is just cheaper, right?

[00:44:56] Like if you just liquidate, but a lot of people don't want to sell the house.

[00:44:59] I don't know what to tell them, but like, you know, I mean, if you sell and you

[00:45:02] go to cash, it can be a lot cheaper.

[00:45:04] Like you pay a 5% commission to your realtor as an example to liquidate that cash, but

[00:45:08] that's 5% on the whole value of the home.

[00:45:10] You're already paying a 5% interest on your mortgage on an annual basis, right?

[00:45:14] So adjust your amortization.

[00:45:16] So a lot of people are extending into longer AMs and you're seeing 25 and 30 year insurable

[00:45:20] AMs now with some of these CMHC changes, which I really do think was aimed at renewals,

[00:45:24] to be honest.

[00:45:25] I think they want to try and get these payments lower.

[00:45:27] Boost your credit score.

[00:45:28] So like if you have some of those bad loans or credit card debt or whatever, like start

[00:45:32] getting rid of some of that stuff, because that is one of the things that people really

[00:45:35] underestimate as value of something that can improve the rate, the pricing that you're

[00:45:40] getting.

[00:45:41] Yeah.

[00:45:42] Yeah, totally.

[00:45:42] Really great points.

[00:45:43] Okay.

[00:45:43] So a couple things I'd add there.

[00:45:48] If you are a homeowner, maybe start to budget now for potentially higher payments, right?

[00:45:53] Have that rainy day fund, that slush fund, whatever it is.

[00:45:56] And no matter what happens, at least you are going to be prepared, right?

[00:45:59] Create a renewal fund, right?

[00:46:02] Set aside a little bit of extra cash each month to potentially cushion that impact of maybe

[00:46:09] inevitably higher rates.

[00:46:11] And again, if you've done what Dan has just told you to do, you should be in a better position

[00:46:15] to understand and know if your rates are going to be higher and by how much.

[00:46:21] Review your budget.

[00:46:22] Identify where you can maybe cut back and accommodate that potentially higher mortgage

[00:46:27] payment.

[00:46:28] Maybe it's about making some of those tough decisions, right?

[00:46:30] Maybe you cancel that vacation.

[00:46:32] Maybe you postpone that renovation or whatever it may be.

[00:46:35] And then here's one that a lot of people don't think of, but consider making lump sum

[00:46:41] payments before that renewal comes up to reduce your principal and potentially allow you to

[00:46:46] qualify for better rates.

[00:46:47] Now, some mortgage products actually don't allow for lump sum payments.

[00:46:53] And this is why whenever I'm discussing a mortgage with the client, I'm very careful

[00:46:57] to tell them that, look, yes, obviously rate is important, but product is very important

[00:47:01] as well.

[00:47:01] Because if you have a product that allows you to do things like make lump sum payments,

[00:47:05] that can have a much greater effect overall than a few basis points on a rate overall.

[00:47:13] Yeah, 100%.

[00:47:14] Yeah, let's maybe I'll just go through a couple of things of how some of these policy changes

[00:47:17] might because they mentioned a lot of the policy change.

[00:47:19] We've talked about these a lot, but removing the stress test should increase competition

[00:47:22] among lenders, hopefully more favorable rates for borrowers.

[00:47:25] Increasing the cap on insurable properties will make it easier for buyers to enter the market.

[00:47:30] This could lead to increased demand for entry level properties, potentially putting upward

[00:47:33] pressure on home prices of those types, a lot of which investors own.

[00:47:37] So maybe that's an opportunity for investors to liquidate if they need to, if they're in a

[00:47:40] bad position.

[00:47:41] Allowing longer AMS, same thing.

[00:47:43] It's going to create higher borrowing power, right?

[00:47:47] Lower payments, higher borrowing power.

[00:47:49] Whether I like it or not, I don't think it's a good thing, but that's the end result.

[00:47:52] This also means they're paying more interest over the life of the loan and they're building

[00:47:56] equity more slowly.

[00:47:58] And then maybe just quickly go through, I guess, what you think would be kind of more broader

[00:48:03] implications.

[00:48:04] Yeah.

[00:48:04] Yeah.

[00:48:05] I mean, look, mortgage activity, real estate activity has been down.

[00:48:09] That is a very broad statement and I'm careful by saying that, but numbers speak louder than

[00:48:14] words.

[00:48:15] We might, however, see an increase in overall activity if these policies make it easier for

[00:48:20] some borrows to qualify or refinance.

[00:48:22] There's also potential for increased risk in the lending system if these changes lead to

[00:48:27] higher levels of household debt and encourage people to take on larger mortgages, right?

[00:48:32] Dan, that's kind of how we got into some of the predicaments we're in now.

[00:48:35] Going from 1 million to 1.5 million, again, that might have been adding fuel to the fire.

[00:48:41] So we'll see how that one plays out.

[00:48:43] And lenders may need to adjust their risk assessment models to account for these new policies, potentially

[00:48:49] leading to changes in how they even evaluate borrowers and price their mortgage products.

[00:48:55] So I think 2025 is going to be a year of very evolving stories in the credit market.

[00:49:02] Overall, these changes aim to, of course, improve affordability and flexibility in the housing

[00:49:07] market for Canadians and investors alike.

[00:49:09] But they've introduced new dynamics that both lenders and borrowers will need to adopt, adapt

[00:49:15] and navigate carefully.

[00:49:17] Yeah.

[00:49:18] So I guess we'll quickly conclude.

[00:49:20] Obviously, from the top, mortgage terms are shifting.

[00:49:23] Borrowers are taking shorter terms.

[00:49:25] Market vulnerabilities are increasing.

[00:49:27] We're seeing rising mortgage debt, higher delinquency rates, et cetera.

[00:49:30] We presented a couple of good strategies towards the end there for 2025.

[00:49:33] We got a million mortgages set to renew.

[00:49:35] Borrowers need to be prepared.

[00:49:36] But also, if you're in acquisition mode, like we've been talking about the moment in which

[00:49:40] you're going to start to see this through the crack show and there will be opportunities.

[00:49:43] This is probably it, right?

[00:49:45] Any final words for homeowners here, Nick?

[00:49:48] Yeah.

[00:49:49] Review your mortgage terms and start preparing for that renewal wall in advance, right?

[00:49:55] Especially if your mortgage is due sometime in 2025 and maybe 2026 even.

[00:50:01] Consider making those extra payments now to reduce that principle.

[00:50:04] If you don't know how to do that, reach out to me.

[00:50:07] Reach out to your lender.

[00:50:09] But proactivity is much better than reactivity in these times.

[00:50:14] Yeah.

[00:50:14] A hundred percent.

[00:50:15] Yeah.

[00:50:16] And I think for all listeners, review and adjust your financial plans and stay informed

[00:50:20] with all the updates on the policy side.

[00:50:22] And I guess before we wrap up, we'd love to hear from you.

[00:50:24] Obviously, please subscribe, rate, follow the show for more in-depth analysis of Canada's

[00:50:31] real estate market.

[00:50:31] Follow us on Instagram, YouTube, Twitter, TikTok threads.

[00:50:34] I think we're on everything.

[00:50:35] Go to a meetup or attend our first annual GTA Ugly Sweater Holiday Party on December 10th.

[00:50:42] Boom, the announcement.

[00:50:42] This is December 10th, right?

[00:50:43] Yeah.

[00:50:44] December 10th.

[00:50:45] Yeah.

[00:50:45] We're going to make this an annual, hopefully annual Ugly Sweater Party for the real estate

[00:50:48] industry.

[00:50:49] So we'd love to see you there in the GTA.

[00:50:51] And yeah, make sure you join our online community at realist.ca.

[00:50:56] Nick, send us home with a review here.

[00:50:59] I would love to, Dan.

[00:51:00] Five stars from Simon Tham KW.

[00:51:05] He says, relevant, balanced, and informative.

[00:51:08] What a great variety of topics, including much appreciated in-depth looks at headlines

[00:51:14] and market changes, banter, and dad jokes round out the offerings nicely.

[00:51:18] Finally, someone likes our joke.

[00:51:21] I appreciate that you guys do your homework and provide the data to back up your positions.

[00:51:26] Well done all around.

[00:51:27] Thank you so much, Simon Tham KW.

[00:51:30] Maybe Kitchener and Waterloo there.

[00:51:32] Simon Tham, we appreciate you taking the time to leave a review.

[00:51:35] We appreciate every single one of you that takes the time to leave a review or if you listen

[00:51:39] on Spotify to leave a rating.

[00:51:40] I think, Dan, we're at almost 1100 five-star ratings now, which is just amazing.

[00:51:44] Yeah, somebody was showing me they were trying to rate us on Spotify today, and it would

[00:51:47] only give them a submit button if they had four stars.

[00:51:50] If they went to five stars, the submit button disappeared.

[00:51:52] So I think there's like a conspiracy out there.

[00:51:55] Yeah, I'm going to have to call Spotify.

[00:51:57] If you're listening.

[00:51:58] Tim Spotify.

[00:52:00] On a very serious note, thank you to all our new listeners.

[00:52:03] The show has been growing rapidly again.

[00:52:04] We truly appreciate you.

[00:52:06] If you got value out of this show or any of the other shows that we do, share with a friend

[00:52:10] and we will see you on the next one.

[00:52:13] Thank you so much.

[00:52:14] The Canadian Real Estate Investor Podcast is for entertainment purposes only, and it is

[00:52:19] not financial advice.

[00:52:22] Nick Hill is a mortgage agent with Premier Mortgage Centre and a partner in the G&H Mortgage Group.

[00:52:28] License number 10317.

[00:52:31] Agent license M21004037.

[00:52:37] Daniel Foch is a real estate broker licensed with Rare Real Estate.

[00:52:41] A member of the Canadian Real Estate Association, the Toronto Real Estate Board, and the Ontario

[00:52:47] Real Estate Association.