The Impact of Future Interest Rate Cuts on the Canadian Mortgage Market and Pineapple’s Growth Potential

Toronto, Ontario–(Newsfile Corp. – August 28, 2024) – As inflationary pressures ease and economic conditions stabilize, the Bank of Canada (BoC) is widely expected to implement a series of interest rate cuts, potentially bringing the overnight rate down to 2.75% by mid-2025. These anticipated cuts represent not just a correction of the monetary policy but a pivotal opportunity for the Canadian mortgage market to regain momentum. For Pineapple (NYSE American: PAPL), this macroeconomic shift presents a significant growth opportunity, positioning us at the forefront of a market poised for expansion.

The BoC’s policy adjustments are grounded in a broader economic context. Recent data suggests that Canada’s inflation rate has been on a steady decline, falling from a peak of 8.1% in mid-2022 to 3.3% by mid-2024. This cooling of inflation, coupled with a slower-than-expected economic growth rate, strengthens the case for further rate cuts. The consensus among economists points to a potential series of reductions that could bring the overnight rate down to 2.75% by mid-2025-a level not seen since before the pandemic.

These rate cuts are expected to have a profound impact on the mortgage market. With the cost of borrowing set to decrease, the affordability of mortgages will improve, driving a resurgence in housing market activity. The impact is likely to be particularly pronounced among first-time homebuyers, who have been sidelined by high-interest rates, and existing homeowners looking to refinance their mortgages under more favorable terms.

According to industry forecasts, the Canadian mortgage market could see a 10-15% increase in mortgage origination volume over the next 12-18 months as a result of these rate cuts. The potential reduction in 5-year fixed mortgage rates to levels below 4%, combined with a surge in insurable mortgage deals entering the 3% range, will create an environment of renewed buyer interest and heightened market activity.

The anticipated rate cuts will significantly shape the competitive landscape of the mortgage industry. As the market adjusts to lower interest rates, the need for timely and precise customer engagement will become more critical. In this environment, leveraging data and analytics to anticipate borrower needs and offer tailored solutions will be a key differentiator.

Pineapple’s approach focuses on understanding these shifts and strategically positioning itself to meet the evolving demands of the market. By closely monitoring market trends and customer behavior, we aim to align our offerings with the specific needs of borrowers, particularly those impacted by rate changes. This includes focusing on the upcoming wave of mortgage renewals, where nearly 45% of Canadian mortgages are set to renew in the next 18 months. The lower rate environment is expected to drive a significant portion of these homeowners to consider refinancing.

In a competitive market, the ability to adapt to these dynamics and provide relevant, timely solutions will be crucial. Pineapple’s emphasis on data-driven decision-making and strategic customer engagement is designed to navigate these changes, ensuring that we remain well-positioned to serve our clients effectively during this period of market transformation.

The BoC’s rate-cutting trajectory is poised to ignite a new wave of demand in the Canadian mortgage market. For Pineapple, this is more than just a market trend-it is a strategic inflection point. We are prepared to harness this momentum, driving growth through targeted customer engagement and innovative mortgage solutions.

As housing starts slow and the rental market softens, the value proposition of homeownership will become increasingly compelling. The cost of renting remains elevated, and with non-permanent resident growth projected to decelerate, the demand for home purchases is expected to rise. Pineapple is ideally positioned to serve this demand, offering competitive rates and personalized mortgage solutions that meet the needs of a diverse customer base.

We anticipate that our strategic initiatives will translate into a 20-25% growth in mortgage origination volume over the next two years, with a corresponding increase in revenue. This growth will not only strengthen Pineapple’s market position but also deliver substantial value to our shareholders.

As the Bank of Canada navigates its course of interest rate cuts, the Canadian mortgage market stands on the cusp of a new era of growth and opportunity. For Pineapple, these developments are not merely external factors-they are catalysts for our continued expansion and success. By leveraging our advanced technology, data-driven insights, and customer-centric approach, we are poised to lead the market, driving growth that benefits our clients and delivers value to our shareholders.

About Pineapple Financial Inc.

Pineapple Financial Inc. is an award-winning fintech and leading Canadian mortgage brokerage network, focusing on both the long-term success of agents and brokerages, as well as the overall experience of homeowners. With approximately 700 brokers within the network, Pineapple creates cutting-edge cloud-based tools and AI-driven systems to enable its brokers to help Canadians realize their dream of owning a home. Pineapple is active within the community and is proud to sponsor charities across Canada to improve the lives of fellow Canadians.

Forward-Looking Statements

Certain statements in this announcement are forward-looking statements, including, but not limited to, the Company’s proposed Offering. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs, including the expectation that the Offering will be successfully completed. Investors can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations that arise after the date hereof, except as may be required by law. These statements are subject to uncertainties and risks including, but not limited to, the uncertainties related to market conditions and the completion of the initial public offering on the anticipated terms or at all, and other factors discussed in the “Risk Factors” section of the registration statement filed with the SEC. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and other filings with the SEC. Additional factors are discussed in the Company’s filings with the SEC, which are available for review at www.sec.gov.

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