MLN NewsStream

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.