What Now?!? Mortgages in 2019

#HappyNewYear!  

As we begin 2019 many Canadians are wondering if they will achieve the dream of homeownership this year.  Will they meet qualifications?  Will they be able to save enough down payment?  Will they get good rates, or did they miss out on the rock bottom pricing of the last 18 months?  


There’s never a concrete answer when it comes torate; the economy, both national and international, is such a volatile creature but there are some things to be aware of that help to make a few predictions.


Bank of Canada has been aiming to bring it’s overnight rate back to the 2.5% to 3.5% range, what they consider “neutral”.  Currently, this rate is at 1.75%.  Each time the overnight rate moves so does the PRIME rate that banks use.  MOST have set their prime at 3.95%, although a couple is using higher…something to stay aware of when you are hearing of Prime MINUS XX.XX%.  All are not created equal.  With the hint of economic weakness in the air due to plunging #oilprices, vulnerable stock markets, and central bankers who have taken a more softened approach to interest hikes, the odds of reaching that “neutral” rate are dwindling for 2019.   


 With the large discounts available to borrowers in the Prime lending arena, (Prime minus 1.20% currently!!) many borrowers are going variable and planning to ride it out for the next five years, a trend that will likely continue through the first quarter of 2019.   Throughout the upcoming year, it’s likely that the spread will lessen between the fixed and the variable rates, due to one or two cautious hikes to the overnight rate, and that will make the 5 year fixed a more attractive choice (currently 3.49%!) .  


With an election in the near future, policymakers are likely to start listening to the #mortgage industry as we’ve been providing constant feedback since the new regulations came into effect.  There are areas that need to be moderated but the current regulations are putting some categories of borrowers at a large disadvantage, primarily #firsttimehomebuyers, and borrowers who are looking for a #renewalmortgage on their current expiring mortgage.  Pay close attention to candidates that build part of their election on the housing/mortgage industry platform…it has a far-reaching effect on our country and the ability of the average Canadian to buy a home.  


As for the other questions asked by many on the eve of this New Year regarding whether they qualify, their down payment capabilities, etc., these are the types of questions that require some discussion with a professional.   The attached article discusses automation as a breakthrough in the mortgage industry.  There may or may not be some truth to this, but I believe that relationships, great customer service, expert advice tailored to each individual, combined with the same great rates you can find through automation, will always be the way a majority of Canadians want to deal with their finances.  Some clients make that initial phone call and they are ready to buy, everything is exactly as it needs to be…but others need to be worked with side by side from the brink of Bankruptcy to a place where they buy their dream home with 5% down and AA+ rates.  #Selfemployed borrowers are a set of buyers who will especially benefit from the guidance of a #mortgagebroker.  Navigating the documentation and requirements needed for this particular group is a complex and potentially confusing job. 


Let’s also consider that the ready to go buyer may benefit from some consideration into what term of a mortgage is best, what penalties they’ll pay if they move during their initial term, can they switch this property into a rental at some point, etc.  These are questions best answered by a professional, by someone asking the right questions.  Through the process of building a relationship with the team who will take you to the next step on your journey, these questions and more become a part of the conversation.  Building a team of an experienced #Mortgageexpert and a top-notch professional #Realtor helps make for the smoothest experience.  Five Star Service Every Time! 

Written by 

Rhelda Baschuk, 

rhelda@enrichmortgage.ca

Enrich Mortgage Group    Mortgage Alliance   

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