Many mortgage brokers are fielding calls from clients concerned about rising interest rates and an uncertain economic outlook.
With the Bank of Canada’s eight consecutive rate hikes, along with inflationary pressures and the very real possibility of a recession this year, it is easy for clients to assume the sky is falling just as they’re about to sign a deal for the biggest purchase of their lives. This, in turn, affects the business mortgage brokers are seeing right now.
“Brokers are saying their business to date is probably down anywhere from 20% to the extreme of 60%,” Frances Hinojosa, CEO of Tribe Financial Group, said during the Mortgage Professionals Canada webinar Cultivating Consumer Confidence through Candid Conversations. “We’re all in the same boat.”
So, what can mortgage brokers do to help alleviate some of the concerns their clients are experiencing?
1. Be your client’s market expert
Given Canada’s somewhat tumultuous economy, clients are understandably nervous about their chances of buying the home of their dreams. One of the best ways for mortgage brokers to keep clients cool and collected is to let them know exactly what is going on in the market today.
“You have to make sure, at this point, you’re really educated,” said Tracy Valko, founder of Valko Financial. “You’re educated on where the market is, where inflation is, what you’ve done with a particular client, why you’ve put them in the mortgage that you did — and where they’re at today with their finances.”
With that knowledge, brokers may want to call up clients when the Bank of Canada comes out with a new interest rate. Valko says brokers should be sending out monthly emails to their client database telling them exactly what’s going on in the Canadian market. And when changes do happen, Valko says, brokers should expect to be the trusted point of contact for their clients.
2. Be your client’s (real estate) therapist
More important than understanding the current real estate market conditions and trends, however, is understanding your client. They are almost certainly not a market expert, and likely won’t become one overnight even with an expert broker to guide them.
Brian Hogben, owner and principal broker at Mission35, said brokers should start by asking really, really simple questions of their clients: “How much can you afford? What’s going on in your situation right now? I know you don’t like that payments have gone up—can you afford them?”
Bringing the conversation back to your client, and what they need and want, can take the stress off of market conditions that no broker (or client) has any hope of influencing. It can also make you, as a broker, more relatable. Instead of being a cog in the real estate market machine, you become a friendly face determined to guide a client through their journey.
“When you talk to people, and you validate them, and you show relatability to their story or their situation, then you’re going to be able to have a connection with people,” Valko says. “And that connection will result in you being able to help them work out whatever financial solution they need.”
3. Be honest about what you don’t know
As tempting as it may be to sound like an oracle for mortgages and real estate, no one, not even the Bank of Canada, can say with absolute certainty what the future holds.
“The reality is that none of us know,” said Ryan Boughen, a Regina-based mortgage broker with TMG The Mortgage Group. “That’s why we’re having this conversation…because of the surprise that happened in the last year when we started to get hints that we were going to be seeing high inflation.”
While your clients may desperately want certainty about their mortgage, rate hikes, and the overall housing market, being fully transparent about what you don’t know can be just as important to building consumer confidence as what you do know, Boughen added.