In 2024, the pulse of the economy might as well be taken by checking the mortgage market's blood pressure. Mortgages are that critical to Canada's outlook.

Millions of borrowers want to know what lies ahead, as do mortgage pros. But we didn't want to write some dry-as-sawdust mortgage prediction article. Luckily, when MLN needs answers, we know who to ask.

In today's bulletin, these seven industry all-stars foretell what's on the mortgage horizon for 2024, sharing essential advice in the process:

• Collin Bruce, Lead Broker of the DLC Collin Bruce Team
• Dan Eisner, CEO of True North Mortgage
• Hash Aboulhosn, President & Co-Founder of Rocket Mortgage Canada
• James Laird, Co-founder of Ratehub & Co-CEO of CanWise Financial
• Jim Tourloukis, President of Verico Advent Mortgage Services
• Ron Butler, Mortgage Broker at Butler Mortgage
• Tracy Valko, Principal Broker, Valko Financial Ltd.

This isn't your run-of-the-mill crystal ball gazing. Each of these industry moguls dropped multiple truth bombs for the year ahead. Enjoy...
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Welcome to 2024, a year that promises to be easier on borrowers' wallets.

Sometimes, though, promises from the financial world are like that buddy who swears they'll help you move and never shows up.

That's why, even though the odds now favour floating-rate mortgages, it pays to account for unexpected twists. Excess fiscal stimulus, immigration, housing inflation and new supply shocks are just a few reasons why inflation could remain stubborn, keeping rates higher than expected (not a prediction).

Fortunately, there's a simple solution to hedge that risk economically: the hybrid mortgage. Think of it as the mullet of the mortgage market—business in the fixed front, party in the variable back.

If you're a mortgagor, here's to a year of lower rates and greater savings, so you can invest in your future and not in interest!

If you're a mortgage professional, here's to a thriving mortgage market, thrilled clients and seamless transactions.

And to everyone, most importantly, here's to a year of positivity, unlimited success, closeness with family and friends and doing whatever it takes for good health. You deserve nothing less!

Fittingly, yields on all the most common fixed-rate funding cost indicators closed at 7-month lows to end the year. And they all finished 2023 lower than 2022. That includes the 5-year #GoC#, 4-year swap, 5-year CMB (see chart below), and so on.

If forward rate markets are right, it's all just a precursor to what's to come in 2024. "It truly is just a matter of time before rate cuts commence," BMO Chief Economist Doug Porter said in a recent report. "The market is looking for spring rate relief..."

On that note, here are five factors that will play on mortgage rates in 2024:

Not many realize it, but Equitable Bank (TSX: EQB) has been quietly schooling every bank on the TSX and S&P 500 when it comes to 10-year total shareholder return.

And who's at the helm of this dark horse in the banking race? None other than Andrew Moor, a former mortgage brokerage head who's a passionate big bank challenger.

For years, Andrew's been waving the mortgage broker flag with more gusto than a sports fan with front-row seats. In fact, much of the bank's success is thanks to its thousands of broker originators.

Now, Andrew is not your typical CEO who sticks to the script. He's a candid shot of whiskey in an industry of tepid water glasses. We jumped at the chance to have a little sit-down with him because, let's face it, who doesn't love a straight shooter? True to form, he graciously answered every question, including some that tend to make bankers sweat like a polygraph test.

In the video interview that follows, Andrew unpacks a smorgasbord of mortgage topics, including:

• The "risk of overtightening" mortgage regulations
• What could fuel default risk in this cycle
• The "unfair" exclusion of some home buyers
• The future of reverse mortgages
  (Equitable's reverse mortgage business has grown 42% y/y.)
• Why Equitable doesn't offer a reverse HELOC
• Why a bank like Equitable can't match Big 6 prime uninsured mortgage rates
• How fast the non-prime market could grow
• The fairness of how banks are expected to respond to borrowers who don't pay
• A potential regulatory change on amortizations used to qualify for a mortgage
• What his bank's stress tests suggest could happen if inflation didn't fall as expected
• The likelihood of arrears exceeding 1%

...and more.

This one's worth a view.

Calling mortgage renewal risk a "hot topic" is like calling the Grand Canyon a nice ditch, quite an understatement. Mortgage renewal chatter is hitting a level of buzz we haven't seen in decades, as the Google Trends chart below documents.

Bank of Canada researchers piled on the mortgage renewal conversation last week with a staff research report that made headlines. But while it was good at scaring people about the magnitude of potential payment increases, it left many wondering what it might take to mitigate that risk. It was like a mystery novel that ends with "To be continued..."

To measure the true depths of the renewal abyss, we reached out to the BoC for clarity on its analysis. Here's what it revealed.

Here's to a season of peace, good laughs and memories with those you hold dear. Amidst the warmth of the holidays, we express our heartfelt gratitude for your membership in the MLN community. And as we all reflect on the year gone by, may our focus turn with eagerness to the endless possibilities ahead.

All the very best to you and yours this holiday season,

The MLN team

The thorn in big banks' side will soon be gone. After a shoddy review by the Competition Bureau, the Finance Minister has given HSBC's merger with RBC the bureaucratic blessing we all saw coming.

HSBC was the one Big 6 challenger with low enough uninsured funding costs and the will to advertise rock-bottom rates. It'll now fade into memory after the deal closes in the next month or so. Most of HSBC's mortgage customers will then be gobbled up by the golden lion, and remaining lenders will rub their hands with glee at the prospect of plumper profit margins.

As for HSBC's broker arm, which often advertised the lowest uninsured rates in the channel, here's what we know—or don't know—so far:

• As of noon today, sources tell us that HSBC has refused to provide clarity to DLC and its brokers regarding the fate of its broker channel. Talk about leaving your "partners" hanging.
• Our management contacts at HSBC said they were required to refer us back to media relations. But HSBC's spokesperson apparently took a vow of silence, saying she had no information to share.
• RBC's media man said he'd offer more details "once we have a clearer picture" of the plan.

If we were Vegas line makers, we'd post the odds at somewhere between nil and zilch that RBC keeps HSBC's broker channel going much past the closing date. We'd love to be wrong on that and understand that Dominion Lending has approached the bank previously to find a way to keep it going. But don't throw your retirement savings on this long shot just yet.

The fate of HSBC's mortgage team post-merger is about as clear as a fogged-up windshield. RBC's gracious "minimum period of six months" employment pledge probably has HSBC staffers hanging by a thread like precarious Christmas ornaments. As for how many will get the corporate version of a lump of coal, that's anyone's guess. Spare a thought for this bunch this holiday season; their yuletide cheer may just come with a side of job hunting.

As for HSBC's mortgage borrowers, which will soon transition to RBC customers, the #DoF# made RBC agree to the following:

• HSBC customers must be able to transfer to RBC with no fees (legal, appraisal or otherwise)
• RBC employees must "proactively and clearly" provide information on "whether special or non-posted rates and other price discretion is available" to each HSBC borrower. In other words, no sticking renewing HSBC borrowers with posted rates! (Not that any bank would dream of such a thing.)
• RBC must advise on "Whether mortgage holders can negotiate the interest rate on the basis of demonstrable offers received by other lenders or through mortgage brokers." Amusing. The DoF felt it needed to have RBC remind borrowers they could negotiate.

This deal will soon be swept under the rug. One can only hope that voters keep a mental sticky note about the day a certain taxpayer-funded agency and Finance Ministry, whose job descriptions included championing the competitive spirit and defending consumer wallets, seemed to take an unplanned sabbatical when duty called.

The Competition Bureau's contradictory report on the merger reads like a paradox wrapped in an enigma. It appears the bureau was all too eager to give its bureaucratic nod of approval—a rubber stamp so enthusiastic, it might've bounced back and hit 'em in the forehead. And they did it using their very own words, no less.

• "HSBC Canada offered market-leading rates."
• HSBC "issued below market rates."
• The RBC deal would "result in a loss of rivalry."

Then, in a punchline framed as a press release, the Finance Minister declared with a straight face: "The proposed acquisition would not lessen competition for mortgage rates."

Low rates are "most frequently driven by competition from Big 5 Banks,” the DoF claimed. Pinocchio would've blushed at that one, as the nose of whoever wrote this fiction probably wouldn't fit out the door.

Our megabanks may fund and close most mortgages, but it's been the scrappy lenders at the margin that advertise the most competitive rates—the majority of the time. HSBC played that game like a champ, with pricing usually 20 to 80+ basis points below advertised Big 6 offers since 2016.

Make no mistake; yours truly has the utmost respect for the operational brilliance of banks and RBC's chess-like finesse in pulling this deal off. No one should blame Royal Bank for the outcome of this deal as it owes a duty to its shareholders first. And the fact is, HSBC Canada wanted out so some kind of deal was inevitable.

The government could have forced a mortgage spin-off or a sale to a non-Big 6 buyer, but it chose the easy way out. The Competition Bureau—which has never blocked a bank deal—justifies its decision, saying, "HSBC Canada had achieved limited market penetration." Nothing could be more beside the point. HSBC intentionally targeted better-quality borrowers than RBC. So, competition in that segment will now unequivocally decline.

The fact that HSBC had only a 2% market share is not because it didn't have a strong mortgage offering. That 2% share is real-world proof of how hard it is to dislodge the oligopolists from their thrones despite a strong mortgage offering.

The Big 6 banks reign supreme over the uninsured mortgage realm, flexing their capital market muscles, steamrolling competitors with their marketing machines, sprawling their branch networks far and wide, and enjoying VIP access to basement-level funding costs. In Canada, that's a club as exclusive as a table for seven at Sushi Masaki Saito, and out of all prime lending challengers, HSBC was the rare member not just clinging to the edge of the table.

Canada is having a population party, and the invitations should read: BYOH — Bring Your Own House.

The latest numbers from StatsCan paint how badly our leaders are losing the fight to house our citizens affordably. To properly appreciate this train wreck, allow the following stats to sink in.

In the last 24 months of available data:

Rate cut optimism took a temporary detour today as inflation decided to stick it to economists. Instead of falling to 2.9% as Bay Street's number crunchers expected, it parked itself stubbornly at 3.1%.

The average core inflation reading was 3.45%, also refusing to budge from last month's (revised) number.

But not all hope is lost. Here's why the mortgage rate glass is still half full:

On Friday, it was "too early" for Bank of Canada head Tiff Macklem to consider rate cuts.

Four days later, he's ready to consider considering them. Macklem told BNN he now thinks BoC cuts will happen "sometime in 2024."

As Macklem does his monetary moonwalk, the bond market is convinced he's not being forthright (which wouldn't be unusual for a central banker trying to suppress >3% inflation and inflation expectations).

If you're in the mortgage game—and serious about it—strategy planning for the coming year is an annual ritual. When crafting that plan, it never hurts to compare your outlook with that of big players in the mortgage origination space. And in Canada, they don't get much bigger than DLC Mortgage Group (DLCG).

We caught up with Gary Mauris, CEO of DLCG, who's been steering DLC's ship around the interest rate tsunami and housing storm. He gave us the lowdown on his team's 2024 mortgage expectations and a behind-the-scenes look at the company's internal optimizations.