5 Year Fixed 5.19%

5 Year Variable 3.25%

Open House - The Real Estate & Mortgage Show: February 26th, 2022

Open House - The Real Estate & Mortgage Show: February 26th, 2022

Date Posted: March 1, 2022

The “V” we experienced overt the past two years in the real estate market shows how we were adapting to the situation of COVID 19. We didn’t take much time off in the real estate market. By the time June 2020 came around and we were learning how to cope with changes – the market seemed to explode.

We were in a great market in 2020 but we didn’t expect to keep seeing the increases into 2021 and now even 2022. We have even seen the same effect globally. Houses seem to be commonly selling $200,000 - $300,000 over asking price.

The new Bank of Canada announcement is coming out as of Wednesday March 2nd and we are expecting changes to the rates. Today we are at the same rate in terms of fixed rates as we were before COVID almost exactly two years ago today.

With the invasion of Russia into Ukraine, we expected the stock market to plummet, but we’ve seen the opposite happen. This could change at anytime but what we are most concerned about is if inflation will stay or keep climbing. We see the effects happening in all industries from gas prices to groceries. However, we can suspect that the effects of inflation could keep prime rates from climbing.

As house prices rise, we can see the same all over the city, including the outskirts. While typically cheaper to buy a home in the outskirts of town, rising costs of things such as gas are contributing to the costs that need to be factored in to justify saving money with this strategy.

The financial market has extreme volatility right now and proves that it has no real direction. This means it could turn on a dime at any time. Real estate, however, never has a ‘bad time’ to buy. With investors starting anywhere between $10,000 – over $1 million, there is always a property somewhere.

With interest rates going up, can investors expect a larger return? Over time you will see the rate of return go up. It will take a bit of drag before it does as we see the costs of everything catch up to inflating rates and costs but then will see the returns grow as well.

The number of rentals over the last 6-8 months was 4x the amount of there were sales. Now we can see the number almost at the same and seems to be going in the opposite direction.

Can you see us going up another 15 points this year? Last year was 15% which would have never been predicted and 42% over the past two years. It’s hard to tell what the next year will see as we come out of the pandemic. We hope to see the increase stay the same and start to level out a little bit.

There are a lot of people rushing to get their mortgages before rates continue to rise. This could be contributing to the reason we are seeing more listings appearing on the market. If you wait until May, you may be missing out as rates could make a drastic difference than locking in today.

We don’t seem to notice extensile differences between signing on to a 5-year vs. a 10-year mortgage right now. Even with fixed vs. variable, there isn’t enough difference to justify that one is better. If you’re someone that wants to sleep at night and not worry about your rate, then take the fixed rate. It all comes down to what you are most comfortable with.

 

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