The average Canadian worker can expect a 2.5% raise next year, predicts HR company Morneau Shepell. That’s not far off the long-run annual average, unless you happen to be a mortgage broker in a major city.
While the typical Canadian may have seen their pay increase somewhere around 13% over the past five years, many brokers in major metro areas have enjoyed almost double that growth, or more.
That’s largely because home prices keep escalating. In Greater Vancouver, CREA’s benchmark home price is up 22.77% in the last five years. In greater Toronto, prices are up 40.57%. Even Calgary is still 19.35% higher. As home values jump, so does the typical mortgage size, a key variable in broker compensation.
Overall, home prices in major cities have risen more than 24% in the last five years and 70% in the last 10 years. If you assume the average buyers’ down payment is 1/3 of their purchase price (per CAAMP’s data), then new mortgage balances are up roughly $65,000 since 2010. This means higher renewal sizes as well. For a full-service broker earning standard compensation, the result is about $650 more income on a 5-year term, or a 24% pay hike.
Of course, the real estate rocket ship will eventually run out of fuel. There will come a time when prices correct and brokers trail the country on compensation gains. Competition (especially online competition, which prompts more rate buydowns) will also dent industry incomes, as may tighter credit policies. For now, however, big-city brokers will ride the wave of surging prices and broker market share while it lasts.