Here is an expanded version of the article:
The Mortgage Market in 2025: What to Expect
As we enter the new year, the mortgage market is ripe for change. With interest rates still a wild card and government policies shifting, it’s essential to stay informed about what lies ahead. Here are five key trends that will shape the mortgage landscape in 2025.
1. Loan-to-Income Ratios: A Growing Concern
Loan-to-income (LTI) ratios have become a significant concern for homeowners. With non-mortgage debt loads rising and expenses increasing, many borrowers find themselves struggling to keep up with payments. As a result, lenders are becoming more cautious, and LTI ratios will continue to play a crucial role in determining mortgage eligibility.
2. Switching Volumes Surge
Renewals are expected to peak this year, with 1.2 million mortgages up for renewal – far above the norm. To avoid payment shock, borrowers will comparison shop mortgage rates more aggressively. Many will exploit new rules that permit switching lenders without having to pass the federal mortgage stress test.
3. Debt-Service Ratios: A Growing Burden
While debt-service ratios (DSRs) have declined slightly, they’re still near a record high. Non-mortgage debt loads, such as credit cards (+9.4%) and auto loans (+13.6%), have ballooned year-over-year. This will lead to many borrowers seeking cheaper accommodations, with middle-class Canadians increasingly looking for new homes further from city centers.
4. Cross-Selling: A Win-Win for Consumers?
Deposit-taking lenders are willing to sacrifice upfront interest revenue by offering fatter mortgage discounts in hopes of cross-selling other financial products. While this arrangement benefits consumers, it will put a competitive squeeze on lenders that don’t have other services to sell (monoline lenders).
5. Rate Competition: A New Era for Lenders
Lenders are sharpening their renewal rates to keep customers in-house, anticipating the potential exodus of borrowers switching lenders. This will lead to a more competitive mortgage market, with consumers benefiting from lower rates and better deals.
Only One Thing is Certain: 2025 Will Bring Surprises
While these predictions don’t go too far out on a limb, one thing is certain – 2025 will bring plenty of surprises. With interest rates remaining a wild card, government policies shifting, and consumer behavior changing, the mortgage market will continue to evolve.
About Robert McLister
Robert McLister is a mortgage strategist, interest rate analyst, and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.
Mortgage Rates: A Guide for Borrowers
The rates displayed below are updated by the end of each day and are 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.
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Note: This expanded version includes additional information, statistics, and sources to provide a more comprehensive understanding of the mortgage market trends in 2025.
