Click here to join our mailing list to receive the latest news and updates as they happen. Unsubscribe any time.
New immigrants driving housing demand

Latest in Mortgage News: New Immigrants Driving Housing Demand

The growing demand for real estate in Canada is being driven largely by newcomers, who are making one out of every five home purchases in the country, according to a new survey.

New immigrants to Canada (defined as those who have arrived within the last 10 years) represent 21% of homebuyers and are expected to purchase more than 680,000 homes over the next five years as long as immigration levels remain stable, according to a survey commissioned by Royal LePage.

“In addition to supporting Canada’s economic growth, newcomers to Canada are vital to the health of our national real estate market,” Phil Soper, president and CEO of Royal LePage said in a statement.” It is not surprising that newcomers see a home in Canada as a good investment.”

Despite the challenges many newcomers face in securing financing for a home purchase, the report found that two-thirds (75%) arrive with savings or cash to support their home purchase.

Here are some of the other key findings from the survey:

  • The housing type of choice for newcomers is detached homes (51%), followed by condos (18%), townhouses (15%) and semi-detached houses (13%)
  • The homeownership rate among newcomers is still low, at just 32%, compared to 68% of all Canadians
  • 82% of newcomers choose to stay in their first city of residence

CMHC: Housing to Recover in Next Two Years

canadian housing startsWhile last month already saw a rebound in home sales across the country, the Canada Mortgage and Housing Corporation is forecasting continued strength to build over the next two years.

In its 2020 Housing Market Outlook released Thursday, CMHC said housing starts are expected to stabilize, home sales will strengthen and home prices will recover.

Here’s a look at the agency’s latest forecast:

Housing Starts

  • 200,000 units expected over the next two years
    • Slightly above the 194,000 expected for 2019 (which marks the second annual decline in starts)

Home Sales

  • Between 498,500 and 519,000 by 2021
    • Vs. 452,200 in 2018

Home Prices

  • Between $539,800 and $569,600 by 2021
    • Vs. an expected average price of $488,000 for 2019

“Overall economic and demographic conditions will remain supportive of housing activity over the forecast horizon, halting the declines in starts, sales and average home prices that followed the highs of 2016-2017,” CMHC said in its report.

The agency noted that ongoing trade tensions and elevated household debt present downside risks to its forecast, along with the risk of higher interest rates and unemployment in the coming years.

Latest Broker Lender Market Share

Here’s a look at individual lender performance in the broker space from Q2, the latest data available:

Rank  Broker Channel Lender Market Share
Q2 2019*
12 Mo Share
1 Scotiabank 25.9% +390 bps
2 First National 15.0% +160 bps
3 MCAP / RMG 14.3% -170 bps
4 TD Canada Trust 10% +70 bps
5 Merix Financial 5.3% N/C
6 Street Capital 5.2% +10 bps
7 Equitable Bank 4.7% -10 bps
8 Home Trust Company 4.5% -20 bps
9 Desjardins 3.6% -70 bps
10 Manulife Bank 1.6% -40 bps

The strong gains for three of the top four lenders follows a rebound in residential mortgage credit growth since the start of the year:
Residential Mortgage CreditThe Highlights:

  • Scotiabank, the #1 lender by volume in the broker channel, has seen its share swing in both directions in recent quarters. But some great rates—especially on three-year terms—earlier in the year helped the bank earn back lost share.
  • First National reclaimed second spot from MCAP / RMG. In its Q2 earnings call, First National reported origination growth of 25% in Ontario and the Maritimes.
  • TD market share rebounded after hitting a two-year low in the previous quarter. Commenting on the bank’s efforts to grow its mortgage business during its Q2 earnings, Teri Currie, Group Head, Canadian Personal Banking, said: “We’ve been investing…more on mobile mortgage specialists, more training for our branch advisors (and) a leading capability that is fully digital to apply for a mortgage online.”
  • In terms of mortgage activity by province, Alberta again saw the largest pickup in volumes, up 1.6% year-over-year, followed by Ontario and Quebec, which were both up 0.3%. B.C. saw volumes continue to tumble 1.9%.

Data Source: Finastra puts out an excellent non-public report called Lender Insights, which compiles lender market share data in the mortgage broker industry. We receive data from that report via third-party sources and have quoted it here. The data above is not confirmed, but is believed reliable. Note: These market share figures do not count certain Newton, MortgageBoss or Lendesk volumes (Finastra’s smaller competitors) and leave out a few lenders that Finastra doesn’t report by name, like CMLS Financial.