Good afternoon. I'm Marcus Plowright with the A Team Real Estate Brokerage. 

I'm here with Matt Shaw. brilliant mortgage broker that operates out of our building. but runs a team of brokers. That's great. And we're going to have a conversation about the real estate market financing real estate. And dealing with this. Rollercoaster of, interest rates that we've enjoyed for the last couple of years. That's right.

How long have you been in the mortgage game? 10 years. Yeah.  Five at the bank and, five Berkery. So tell us about your brokerage. So we're a, small team that's spread across Southwestern, Ontario and into the GTA. got kind of agents scattered, but a good chunk of us here in London and we're regrowing. 

we're primarily made up of ex-bankers, with a few, tenured brokers that have kind of joined on. But, yeah, that's generally the makeup of our tape. So you've been in the business for 10 years. That's correct. So you've had this 2014 to 2024 experience. Which has been quite a ride because 2014 to 2017 was pretty standard. market dynamics. That's in the business. We had some policy changes come, you know, the 2018 with the B 20 changes. that was kind of compared to the Y2K. Or they thought there was going to be some big, huge obstacles that were going to come up then. It ended up being kind of a little blip in the road, but,  Other than that. 

and then obviously COVID which, created, You know, the super low rates that we never seen, Into the high 1%, low twos and, really, really low variable rates. And then, obviously within 20 shifted everything over stimulus of the economy. We got into this a point where. the bank of Canada. And I think globally as well. everyone started using monetary policy to try and cool things down. 

So interest rates, went on their way up and we're starting to see some relief now, but, we're not out of the woods yet. No, the relief is slow. That's correct. Incoming. But. Possibly steady. Yeah, it's trending the right way. but, I think it's how many people are impacted during this downward cycle. 

because there's.  a lot of clients that we see within the brokerage, and people we're interacting with on a day-to-day basis. It's tough out there, you know? we're in a recession and disposable incomes down. And when disposable incomes down, that means it's probably tight at home. 

Right. And we're seeing that. I got a lot of people coming up for renewal. a lot of people coming out of these super low rates. So what's that payment shock kind of look like, with, your mortgage coming up for renewal either, you know, towards the beginning of this year and moving into 2026. So that management of that. Payments shock. And the management of home economics for people. 

Yeah. As they transitioned this, I imagine. There is no simple renewable that you manage. Anymore. No. And I think  what we're seeing a lot of is, because of this trend and, and, how widely covered it is in the media. That people are often waiting last minute, we don't get a lot of time, especially for clients that are kind of shopping,  people that we have a relationship with, you know, we're, proactive in the sense of reaching out to them, but anyone that's kind of shopping or kind of waiting to see what's next, what's the big next bank of Canada meeting or what's the next new inflationary report? things that you wouldn't typically pay attention to before. Now there really. on top of these things, and they're thinking that rates are going to have an immediate impact and then they can deal with their written law. and I think the bigger question is everyone's. All wrapped up around this word payment shock, but they don't actually know what that means to them, from a dollars and cents perspective. And I've had several clients that, when we're looking at their renewal options. They say, oh, that wasn't as bad as I thought it was going to be. 

So it's really important to kind of get in touch with a mortgage professional to kind of have that talk and conversation. In advance. And probably won't be as bad as you think. And, hopefully put your mind at ease that you can start to deal with the process and, look at your options. Yeah, I think, It's one of those scenarios where you definitely need professional health. For sure. And a mortgage agents exist to provide financial help to people. In this biggest purchase of their life. Yeah, at the end of the day, if you ask any of our agents on our team, They'll probably say this, that their first and foremost responsibility is to provide advice. 

And that's what we're really there for. I've always been a firm believer that you take care of the client and the rest kind of takes care of itself. Right. monetary commissions. Whatever that may be as far as career. I've had in the past, there's a lot of clients, I don't end up doing the mortgage, but I do. 

I think that I provide them really good advice. Absolutely. If there's a non solution out there that I can provide, but there is a better solution out there. I'll tell them to take it. Because that's what people need right now, especially. Yeah. if I could give one piece of advice. To homeowners or potential homeowners. 

Yeah, it is simply talk to the professionals because generally speaking, it doesn't cost you anything to work with a mortgage broker. Usually can save you money. Absolutely. And a real estate professional. If you're buying it doesn't cost you anything to have the advice of a real estate agent, right. Typically. They have such a breadth of experience and their obligation is to serve your needs. Not the needs of the market, nothing. 

Each of the seller, just your individual needs. Exactly.

You mentioned earlier that there's been this, culture where people are watching for economic changes, waiting for rate cuts, trying to understand what the bank of Canada's decisions are. What's driving them. but I feel like we have recent experience of people seeing a robust real estate market. Boom. So they're waiting for the next one. As if there's going to be one. And that is a question I have often and deal with. 

A lot of clients is. There's an expectation that because we experienced it in the past full experience it again soon in the future. And the reality may be quite different from that recent experience. Yeah, I would agree with you there. but I guess it's how people correlate the information together. 

Right? You. I think for. In recent years here with COVID people assume that big real estate boom that we have is because of cheap money-wise right. Super low interest rates allowed. people that have extensive forwarding capabilities. So because of that, It allowed for this big boom in real estate. 

And Now that, rates are coming back down, people are waiting for this to happen again. Right. but I there's other factors that people kind of neglect there, in the sense that you couldn't really do anything else in COVID. So people put all their money in dollars into their home because that's where they're spending all their time. 

And because of that, you know, that was really the only big thing you could really go ahead and buy. Right. We're buying big trips and vacations because you couldn't go anywhere. I think those were other. variables that contributed to , it was a strange cultural change where if you weren't in the real estate market as an investor, And you were missing it. 

Yeah. And that was true for a couple of years there. Where every month the market. Accelerated and pricing accelerated. And if you missed out, it was going to be more expensive a month later. Yeah. But I am of the opinion personally. that we are going to have a very, very long cycle. We're back to a very long cycle. 

We spent decades in London with three, 4% depreciation on real estate. And it's only in this tenure that you've been an agent. That we've seen radically different. Rates of increase and decrease. Right. but going forward. We have unemployment now that we didn't have. In COVID times and, COVID related. we have a recession that we're dealing with. Which is the reason why interest rates are coming down. inflation has been managed to the point where we may get into disinflation simply because there isn't enough activity in the market. 

Right? So this real estate. Cycle that we're going through. It may take a few years to wash out the bubble that we have to absorb. Of that race increase in decrease that we went through. Yeah. Yeah, I would agree. I think that over this period of time, there's been so many ups and downs. The stimulation to the buyer or the consumer, a bear has been impacted and potentially. I would say even with the last three drops of a quarter point by the bank of Canada here in the last three meetings. I would not say that it is heightened impact to consumer confidence is what most people would have thought. That it would have had, when we had, that first draw, our first pause after all the increases. there was a bit of a wave of consumer confidence, where, I felt that purchases kind of uptick and, you had a lot of people checking in for pre-approvals and whatnot, and it seemed like, oh, we're right back into it. 

but then we had all these holes and that consumer confidence just kind of sat. We had inflation still rising. So cost of items are getting, and people were starting to pinch their pennies a little bit more because any of the money that was accumulated during those cheap. Cheap money times Or during, you know, That ride through COVID. it was kind of depleting itself. 

I think right now we're seeing that. I think Canadians are a little bit more cautious right now. They're putting more money away in savings. even the people that do have disposable income aren't spending it, they're saving it. and I think it's due to the fact of that, that simulation. 

So you might be right here, but you know, the consumer is looking to monitor kind of. Wait and see what happens here. And we're just going to draw out that cycle that might be healthy for our country to get our consumer debt equity debt to income levels. For sure. Absolutely. but it will negatively impact our real estate market. Yeah. I think anything, everything in our economy, small business in general, that thrive off of that. Not disposable income bracket. chunk of money. 

Right? So, yeah, I say that we're not out of the woods. I'm optimistic, obviously. but we'll see. Be curious to see what happens with, with the bank of Canada and how they navigate through this. You make an interesting comment with disinflation, right? So what happens at that point where. Yeah. Can't go lower than. Exactly. let's imagine that consumer demand does come back. Okay. 

And there's a willingness to get back in the market. There's a lot of talk about the fact that there's so many people sitting on the sidelines that once rates come down far enough, there'll be an avalanche of buyers back into the market. Who've been sitting on the sidelines. I don't agree with that, but there is certainly that sentiment that exists. But if that demand comes back, one of the questions I have for you is. It's a credit availability there. Or the banks tightening. To the extent that they only limit. Consumer's ability to spend. Yeah, I, believe so. 

It's in my opinion that, the governing bodies of, the banks, regulator, they've kind of cracked down and, they're looking at the lenders liquidity. All right. And there is a bit of a liquidity issue where they're, they're making, some changes that were to be implemented actually this year, that they've actually postponed due to the fact of where rates are and with the amount of renewals that are coming up, that they need to do, ensure that the banks were. You know, Turning away people and people weren't able to get remortgaged shift if need be. they've kind of, scaled that back, but, I would say that, lending is going to become a little bit tighter. 

I think, Credit applications as a whole, whether unsecured. Lending, auto finance. all those other items. It's out of just the mortgage. those are going to be impacted. They're definitely in the landscape is going to show some changes. And it's probably for the best as well. 

Cause I think it'll put. It was kind of talk Canadians in a better. position and spot. So with that in mind. I find it interesting. One of the things that we have to do constantly as managing expectations of sellers, right. There's almost 3000 houses for sale in the London park. It. L star regional market. And 577 sold last month. 

Right. Which was a record low. lowest in a decade. Okay. So since you started. We've never had a slower August than last month. Right. And with that many houses on the market, the expectations amongst many who list or are sitting on the sidelines waiting to list, is that. As interest rates fall, the market will improve. 

Demand will come back and prices will rise. And my curiosity is given the recession we're in and the growing unemployment. And the tightening bank credit. It may be. Years not months before. We see steady increases in the value of real estate.

Yeah, I think that it's a very negative.  I'm trying to be optimistic, but you're right. Because I, you know, we see it too, right. And I know you guys deal with it a lot more with some of our expectations and. whatnot, but you know, we will often see we're seeing a lot more with the purchases that we are. financing that, the number of conditions to sell a home. in an April. And an offer and, that those conditions don't get satisfied. they either get bumped or, there. Able to advance past the date because it becomes Dillon void because they can't sell the property. 

Now. What my question to you would be is that because there's no one out there to buy it, or is the seller's expectation or need of what they need to sell the home for? Not. Within the market place right now. That's interesting thing. You bring up the finance condition. Can't be overcome. So the tightening of credit, the lack of the ability to service the debt. It, they can't afford that. 

Right. and the challenge we have is just to pick a number. If you want that $700,000 hose, which is slightly above our average Ilana. And you can't quite afford it. He was a buyer really willing to accept a $600,000 house. And the problem is the seller who has the $600,000 house. It's likely asking seven for it because he has unrealistic expectations. 

We ended up in a stalemate, right? Where no transactions are happening because no one wants to budge. No one wants to budge. Right. And I believe that's the market we've been in for the last year. And it may be. Till next spring. We have another fall. Where people are thinking that the salvation comes in the sprint right after rate cuts. 

I think we are in our third spring of waiting for salvation.

And we might go and we might see a four it's a background pocket.

In that environment. We're being very creative on behalf of your clients. So you're, working. Their entire financial portfolio. All their debt, their cars, their credit cards. When they come up for renewal, you must be looking at the equity in that property and trying to be creative. Managing payments. Yeah, interest rates, obviously even a 6%. Mortgage. It's way less expensive than a 20% credit card debt for sure. 

Absolutely.  and that's really looking at the whole financial picture, you know, where renewal is in just, going ahead and seeing what your, best five-year offer is or whatever the term that you're looking at. it's released linking and look at, what your monthly cashflow budget looks like. 

The cliche term cash is king. It really holds a lot of, late right now. I think that's really important, the dollars and cents every, month. So taking a look at that. You know, whether it's tough conversations of maybe we have to go ahead and, get rid of. payment such as getting rid of becoming a one family car or a one car family. Yeah. Opposed to too, right? 

Or is it taking a look at consolidating rolling stuff in, we're not saying that, it makes sense to go ahead and pay a $20,000 credit card off over a 25 year amortization. But is it going to give you the breathing room and the cash? in this period of time to get through this traunch so that you can hopefully benefit from. The better types account, right? Your sector. Mortgage agent sector. 

Yeah. in London, the real estate sector we have about 2300 real estate agents. That really hasn't changed that number since COVID ended. Okay, so we've lost some, we've added some, but. We're not growing. Yeah. as a sector. And there are a lot of.

Agent's having a difficult time. Real estate agents having a difficult time for sure. What do you see happening in the mortgage sector? We're very, very similar. in that sense, Definitely. during the boom of COVID, there was a lot of people that went ahead and decided to venture into this, career. 

And a lot of it, maybe on a part-time basis. you know, one of the biggest things we see is with how COVID has kind of changed. employment is the ability to work remotely or to hold. Many jobs. Any one time. whether it be self-employed or just do the fact of not having to commute. Why not just having meets a lady to work from home. 

So because of that, I think that we had a lot of, new agents come into our industry. and you just really had to have a phone number and you probably would get a call here or there. And yeah, you're able to do a transaction. but as things tightened up, interest rates, rose, you know, purchases slowed down. we've seen a lot of people that didn't renew their licenses this year. or a lot of them just scraping by, in the sense of like, I'm going to give it one more year. 

Right. I think that, As much as a group, we probably saw a lot exit here in this. back half of this. You know, call it a five-year cycle. Probably somewhat necessary just for the remainder to survive. Absolutely. And I think that, you know, if you've got tenured in the established. the book of business and clientele. 

I think that, you know, if you've been doing it for a good amount of time, you become a trusted part of people's conversation, whether it's, every year or every five years or whatever, you're just become a part of their team if you will. And, because of that, I think that, you're, able to go ahead and. continue to be prosperous in this career. But, I would say that, we've had a couple of agents that have come on during the height. Of the market and, you know, they did struggle. 

The environment changed. but they stuck with it and, they've. Done the things that, you had to do. Early in my tenure, when I got into this business. You had to go to open houses. You had to, you had to go ahead and make calls. 

You had to get out there and. And meet people and try and make connections. Right. You can just sit there and wait for your phone to ring. So now we're back to these activities that we, to building a business. Yeah, we're seeing that on the real estate side, for sure. It's hard sometimes when we talk about. Real estate people think of their home. But it's an industry. Yeah. The builders have gone through a boom bust cycle and are starving. Yeah, really, truly starving. 

New construction is almost ceased to exist our local market for the last couple of years. Other than finishing what was pre-sold. Yeah. And, as an industry, we, ploy. And fuel. Lawyers and real estate agents and mortgage brokers and home inspectors, and all of them have been dealing with a decline in volume of 30 to 40%. 

Right. And did that happened in any other industry? It would be cataclysmic. Yeah. Absolutely. but we've had to absorb those losses within our industry. And it, has challenged a great number of the people active the lawyers. The agents in the mortgage age, for sure. Absolutely. it's definitely been challenging, but you don't mind. I would say the silver lining out of it. 

I think it's strengthened a lot of relationships within our. collective cohesive industries. I think that, you know, with a lot of my partners, in our sectors that, brought us closer together. I think you appreciate one another, a lot more. Yeah, that's true. It can be a difficult time to manage. And, survive and learn to live on less. Just like your clients. Exactly, but it is the reality of what we have to deal with. Yeah, even that ride up the hill. enjoying that boom economy of real estate was challenging for many people in our sector, because there was so much competition. there was no such thing as an easy transaction. No. 

And that's the thing, even in the boom, right? if we complain right now about, you know, no exceptions in credit, like blendings become a tire. Why is the bank so tight right now? But then it was like, Aw. Is this appraisal gonna come in on value? what do you mean? There's no financing condition? 

No, home sale condition. Great quick close, you know, a hundred grand over, it was always something, there. Right. I think it's just with the times there's always going to be some sort of thing. That's going to make it a little bit different. One of the things my other guests brought up. . Well,  as Canadian home builders association, president. I was asking her what she sought the government needed to do. And she felt that the one of the steps they might take his to relax. the requirements in regard to mortgages and, The safety net that they built in the stress test. And that she had missed that saved us. I was just going to say that, I don't know if that will be what will happen because. that was in place. 

I think a lot of people have their home still because of it. so I'm not sure if that will ever happen. I think it was put to the test and maybe proven, right. Yeah. that would allow for a lot of, added, benefit from a qualifying standpoint. but you know, I think the government is going to have to be a little bit creative and come up with some other ways to kind of get a lot of first-time home buyers that are still. on the sidelines and a lot of them that I know have just kind of given up in the sense that you know, what, based on what I make and where housing prices are. 

If I don't want to live. You know, somewhere more. Remotely or like a smaller community. I want to live in a center like London or a city of a similar size, like maybe home ownership, just isn't for me. Maybe the silver lining is affordability will return. Because interest rates fall and we don't see a commensurate increase in real estate prices. And that would be a perfect balance for sure. 

I think. And in that way, We just have to make sure that, Everyone's expectations, stay level then. Yeah, that's impossible.

I appreciate you taking the time to talk to us today. Yeah, no, this is great. We should do this regularly so that we can keep up to date on the market. Absolutely. You know, I'm happy to be part of it. This is a lot of fun. Thank you for coming.