2015 was quite a year for Canada. We began the year with oil prices hitting record lows, leading to a quick and steep dip in the Canadian Dollar. While economists began to cite that the economy was headed for trouble and could even be in a recession, the Bank of Canada went so far as to drop interest rates more than once; regardless, the Canadian housing market held strong.
In fact, the Teranet-National Bank House Price Index, one of Canada’s most well reputed and replied upon national house price indices, reported monthly gains in the prices of single family dwelling houses in Canada almost every single month.
So where is the Canadian economy sitting coming into 2016 – well that’s again a matter of speculation. The Huffington Post reported in October that the IMG had cut the growth outlook for Canada by 1% for 2015. In addition they lowered their 2016 outlook to 1.7% from 2.1%. To what do they attribute these changes in forecasts? Those pesky oil prices. The IMF cited the major contributor to Canada’s slowdown as lower capital spending in the oil sector. Read more here: http://www.huffingtonpost.ca/2015/10/06/imf-report-cuts-growth-outlook-for-canada-to-1-0-per-cent-for-this-year_n_8252252.html.
While lenders may have, for the most part, made it through 2015 unscathed, Canadians are still walking around with record debt and some economists don’t think we are on solid footing – we blogged extensively about this in 2015.
One of the most important things to do in lending when the economic outlook is uncertain is to ensure that your backend process to manage your receivables is solid! This means ensuring that you team has access to the tools that can enable them to recoup the most possible on bad deals.
What does this mean? Enabling them to be able to quickly reassess property value information, review the financial status of the property, including checking for liens. This is vital in terms of estimating what your risk position will be at the time of a mortgage default. You can even leverage this type of technology to evaluate entire areas and inevitably be able to identify areas that could be headed for trouble and where you have a lot of exposure. This empowers you, especially if you are a private lender to manage your renewals differently, to try to get out before trouble erupts or even understand that you are not in a power position and would benefit from negotiating with the client in cases where the equity position is weak.
While the outlook for 2016 may as yet be unclear, it is crucial, no matter the state of the Canadian economy, to always ensure that your processes are solid.
To find out more about the risk management options available through Purview For Lenders, please call us today at 1.855.787.8439.