Mortgage rules take a bite.
It appears the new mortgage rules introduced at the beginning of the year is having the intended impact on housing. Last month home sales have declined by over twenty seven percent and listings have increased by near the same amount from same month last year. CMHC also says the annual pace of housing starts in April was lower compared to the previous month. “The seasonally adjusted annual rate of new home construction, which is seen as a measure of the health of the housing market, fell to 214,379 units in April compared with 225,459 in March.”
Home prices have been resilient and prices continue to be higher over the same period last year, even more so for condos and townhomes which has been the darling of our market. Unfortunately prices often lag and we could see softening very soon. On top of this, mortgage interest rates have also increased making it yet again more difficult for buyers and borrowers. I think it is safe to say that market conditions are changing and homeowners need to be ready to adjust their selling strategies if they are planning to sell anytime soon.
The good news in all of this is that buyers will have more opportunities to find the right home. And although mortgage lending is currently very constrained, there are still great deals to be had. Variable rate mortgages are being offered as low as Prime minus 1% and a five year fixed rate can be offered as low as 3.34%. For the past few years many borrowers were not given the choice and had to settle for a 5 year fixed rate. Now if borrowers qualify for a 5 year fixed, they qualify for the other product choices such as 2 or 3 year terms and variable rate mortgages.
A huge bulk of mortgages across the province and country will be coming up for renewal this year. Borrowers often make choices based on fear and I caution you not to be fooled into accepting a high fixed term rate. Talk to an experienced mortgage broker. We can help guide you to the right solution. Click here to contact us.