The last year has seen much speculation about the Canadian real estate market. Most of that speculation has been about the market being too hot in some parts of Canada — specifically, B.C. and Toronto. Why does this matter? The performance of the Canadian real estate market directly impacts your business.
All levels of government have worked hard to cool the markets with two tools:
- Regulatory changes to CMHC regulations — no more high-ratio insurance on refinances, shorter amortizations, borrowers having to qualify based on five-year rates, and larger down payments on property purchases over $500,000. OSFI has also introduced a new stress test for uninsured mortgages.
- Municipal, Provincial, and Federal governments are looking at, and in some cases introducing, other measures, such as new taxation (for example, the foreign buyers’ tax in B.C. and Ontario).
But have these tactics really worked — or was BOC raising Canadian mortgage interest rates in 2017 really the single biggest factor that started to cause a ripple?
These rate increases and the new OSFI mortgage stress testing regulations have left some homeowners who have mortgages at 2% concerned about facing mortgage renewals at current posted rates that are much higher.
Interest rates directly impact Canadian families’ pocketbooks, and with rates being so low for so long, some homeowners have so much personal debt that higher mortgages rates present major challenges. This may lead homeowners out of hotter markets like Toronto and into commutable towns that are far more affordable.
Data released from CMHC in September shows that average credit scores of Canadian mortgage holders are increasing and mortgage holders continue to have better credit scores than average consumers. More than 80% of mortgages in Canada are held by borrowers with a “very good” or “excellent” credit rating. This could be good news for homeowners worried about being able to make their mortgage payments.
So, what can you do? Thrive!
Start reaching out to clients to lock-in and refinance now before it becomes more expensive. This could be an opportunity to convince clients to purchase now before rates increase even further. Already, further rate announcements are scheduled. While more increases aren’t a guarantee yet, they’re not out of the question either. Now is the time for anyone on the fence about refinancing or securing a mortgage to make their decision — before the Canadian real estate market is rocked even more and it’s out of their reach.
Purview for Mortgage Brokers can help with the tools you need identify refinance opportunities.
Contact us today at 1.855.787.8439 or visit www.purviewforbrokers.ca.