2017 was an interesting year. We saw the introduction of new mortgage qualifying rules, tighter underwriting, rising mortgage rates, and the rapid increase in home prices, spurring both enthusiasm and uncertainty within the general mortgage market. The final layer of the B20 qualifying rules, on conventional mortgaging, has been in place since January 1st, 2018 and is predicted to affect more than 20% of consumers. Hopefully this is the final change!
With these new rules in place, 2018 may see moderate Real Estate growth, a stress test that will push consumers to alternative mortgage lenders, and overall higher costs for consumer debt. Now, more than ever, a trusted relationship with an independent mortgage professional is needed. While getting a low rate is important, having an active mortgage plan that best suits your needs is essential to your overall lifestyle.
The Mortgage Centre Kitchener Waterloo is a full-service Mortgage Brokerage with significant lender contact, in-house mortgage solutions and a dedicated mortgage team working together to ensure a customized plan under our Mortgage Free Sooner PlanTM.
We have a Credit Union, who is exempt from the new qualifying rules, that they will continue to qualify at their contract rate on a conventional mortgage for a purchase. A conventional mortgage is more than 20% equity and this may allow you to borrow more than any of the Banks will allow.
ECONOMIC RATE UPDATE
2017 has seen the Prime Rate increase by a ½% percent and another hike took place the other week setting prime at 3.45%. Canada’s employment numbers have been excellent, business sentiment is good, core inflation is still steady at 2% and The Bank of Canada is leaning towards three potential rate increases in 2018. The US has also seen some very impressive economic numbers and the US prime rate is continuing to rise.
The Bank of Canada is taking a cautious approach on raising rates because of the following influences that determine the path of Canada’s interest rates; low inflation, historically high levels of household debt, an anticipated softening of the mortgage market, expanding global economies and NAFTA. The economists were split 50/50 on the upcoming Bank of Canada interest rate announcement.
Our opinion: With interest rates relatively low and increasing pressure on rates to rise we would keep a very watchful eye on both fixed and variable products. We urge everyone to call or email us if you are concerned about the market. It’s a great time to break your mortgage, with current rates being so low.
As a reminder, you should be dealing directly with us if you are thinking of making any changes to your current mortgage. We will give you advice that is best for you and not the lenders. If you have a variable mortgage, it most likely has a lower penalty, which will allow us to shop the market again.
If you know anyone that could benefit from our service, please have them contact us anytime.
