Navigating the Canadian Housing and Mortgage Market
High Interest Rates Impacting the Canadian Housing Market
High interest rates are impacting the Canadian Housing Market, causing many Canadians to pause their housing market plans. Especially when it comes to mortgage renewals. Homeowners who secured mortgages in 2018 and 2019 are now facing considerably higher renewal rates compared to those who benefited from historically low rates during the initial years of the COVID-19 pandemic.
Exploring Early Renewals
Many homeowners are requalifying to ensure they can afford their new mortgage payments and are considering refinancing with a different lender. Some lenders even offer special rates to entice borrowers to switch their mortgage to their institution, all in an effort to reduce mortgage payments and enhance cash flow.
Resilient Property Values
For some homeowners there is an opportunity to refinance and consolidate, ultimately saving money and improving their financial situation. For others struggling with rising borrowing costs, selling their property may also be a viable option.
The Uncertain Future of Interest Rates
The trajectory of interest rates in the current market is uncertain, with no clear indication of whether the Bank of Canada will announce another rate hike. This uncertainty is causing homeowners to seek early renewals to secure the best possible interest rate before rates potentially rise further.
Co-Ownership on the Rise
A growing trend in the Canadian housing market is co-ownership, where multiple individuals, such as friends or real estate investors, collaborate to secure a shared mortgage on a property. This approach allows for owner-occupied and rental properties, generating rental income and ensuring continued participation in the market while improving affordability.
Muted Activity in the Purchase Market
Affordability challenges and high borrowing costs are causing potential buyers to delay their purchase plans. The limited availability of properties within their price range or offering sufficient space has led many to postpone their buying decisions. As a result, the market is witnessing increased interest in mortgage refinances and early renewals.
In this complex Canadian housing market, homeowners and potential buyers must stay informed, explore their options, and act strategically to make the most of the current conditions. Contact Client First Mortgage Solutions if you have any mortgage questions.
Mortgage Professional – Oct 18th, 2023
