Housonomix - 10 May '24: 📉🚀 Dive into Savings: Rates Move Lower After Weeks of Increase - Analysis & Market Insights Await!

🎥 Housonomix Highlights: Insights at a Glance 🕒 (in less than 60 seconds) ✨

🚀 📉Rate Watch: Good News for Mortgage Shoppers 💡

• 📉 Good News! Fixed mortgage rates, which had increased in April, are now dropping. The main driver? Lower bond yields triggered by optimistic comments from the US Federal Reserve. We explain this further below in this edition’s Maple Pulse section.

• 🏡 Uninsured Rates Drop: There’s a significant reduction in variable rates for uninsured mortgages—thanks to TD Bank’s promotional rates available until May 14th (that’s what TD is claiming is the deadline, we’ll see). Remember, these rates are for purchases above $1 million or for refinancing.

• 🚫 Caution Advised: Despite the drop, for most clients, we recommend holding off on choosing variable mortgages for now, as the current premium for variables is still too high over fixed rates. It’s best to discuss with us to see if the risk with variables is worth it for your requirements.

📢 Rates customized for you As always please remember, rates mentioned here are the current rates quoted by lenders. As each mortgage is customized for the borrower, the rates are also customized. In most cases the rates you would get, would be significantly lower than what’s posted here. Please reach out to us at www.ronmortgages.com to get your custom rates.

📊 Real Estate Radar: Analyzing GTA's April 2024 Market Dynamics 🏘️

In the latest release from TRREB, the Greater Toronto Area's real estate landscape shows a mixed bag of trends for April 2024. Let's dive into the details:

• Price Trends: Most property types have witnessed an uptick in their average prices. The standout exception is townhouses, which saw a decline of 3.7%. Overall, the average price across all properties slightly increased by 0.3% year-over-year, demonstrating a stable but still increasing pricing environment.

• Sales and Inventory Shifts: The main story however is the market dynamics having shifted noticeably, particularly if you look at the sales and listings data. Total sales have dipped by 5%, signalling a decrease in transaction volumes. Conversely, there's been a significant surge in inventory, with new listings and active listings rising by 47.2% and 74.4%, respectively.

• Our Take: This influx of available properties and extended days on the market suggests that it is currently a buyer's market. Sellers may need to adjust their expectations and pricing strategies to ensure a sale. This is the kind of market where working with real professionals like experienced realtors, matter. In such an environment an experienced professional can ensure that you snag an excellent deal whether you’re a buyer or a seller.

  In summary, while property prices are generally holding steady, the increase in listings indicates more options for buyers, potentially leading to competitive pricing and better deals facilitated through expert negotiation.

📜 Canada's 2024 Budget and Housing Plan - Deep Dive 🏡🔍

🍁 Maple Pulse: Relief For Fixed Rate Borrowers and Investing Smarts – Why Single-Family Homes are a Hot Pick Amidst Supply Crunch 📈🏡

Welcome to this edition’s Maple Pulse where we highlight the key events of the last few weeks impacting the Canadian Economy and housing impacting your property buying and selling decisions.

• Relief for Canadian Fixed-Rate Mortgage Borrowers: Recent developments in bond yields have brought some relief to Canadian fixed-rate mortgage borrowers. Triggered by a steady U.S. Federal Reserve policy rate and less aggressive rate-hike rhetoric from Fed Chair Colin Powell, U.S. Treasury yields have dropped, influencing a corresponding decrease in Government of Canada bond yields. This reduction has helped alleviate some upward pressure on fixed mortgage rates in Canada. The Bank of Canada now finds more room to consider rate cuts, potentially starting with its next meeting on June 5, aligning closer with U.S. monetary policy. This change offers a temporary respite for borrowers, increasing the attractiveness of variable-rate mortgage options as the premium between fixed and variable rates narrows.

• TD's Attractive Variable Rate Offer: TD Bank has unveiled a competitive variable rate mortgage at 6.19%, which is 101 basis points below Canada's benchmark prime rate of 7.20%. This limited-time offer, available until May 14, marks the most substantial uninsured variable discount since 2021 and is complemented by up to $4,100 in bonuses depending on the mortgage size. Despite its appeal, TD has not widely advertised this rate, possibly due to regulatory concerns over stimulating an already hot housing market. The bank's strategy appears to target savvy consumers, offering significant savings for those in the know. (Ron’s take: We’re not actively encouraging even this variable rate mortgage yet, as these rates are still too high over the fixed rates that we’ve been able to get for most of our clients this year.)

• Mixed Reactions to Trudeau's Capital-Gains Tax Hike: A recent poll reveals that Canadians are divided on Prime Minister Justin Trudeau’s proposed capital-gains tax increase, with 45% believing it will dampen economic growth by reducing investments and innovation, while 38% view it as a fair measure to bridge economic disparities. The tax hike, set to increase the taxable amount on capital gains over C$250,000 from 50% to 67%, aims to fund initiatives like aiding young people in purchasing homes. Despite these intentions, scepticism remains high, with a significant majority unsure about the prospect of housing becoming more affordable within five years. This sentiment is particularly strong among younger Canadians, casting doubt on the policy’s target of "generational fairness."

• Smart Money Investing in Single-Family Homes: Per this piece, the stark imbalance between Canada's burgeoning population and the sluggish pace of single-family home construction presents a unique investment opportunity. With housing starts at 40-year lows and an annual increase of 20 people per single-family home built, the supply-demand mismatch is set to propel home prices upwards. While current mortgage rates pose a challenge, analysts expect a downturn in rates and an upturn in single-family home values. This scenario offers a strategic window for buyers with the financial stability to invest, potentially bypassing the wait for lower prices or rates, which could further fuel demand and elevate prices (Ron’s take: We agree. The reality is that the housing crisis will not be resolved for years. It needs a lot more supply to actually come online, immigration levels to drop etc. Till then demand is going to continue to outstrip supply, creating plenty of opportunities.)

• Immigration Growth Meets Housing Shortage Crisis: Across 13 developed economies, including Canada, the UK, and Australia, traditional economic growth fueled by immigration is clashing with severe housing shortages. As countries reopened borders post-pandemic, the influx of immigrants has escalated housing demands, exacerbating the housing crisis and driving per-capita recessions. Despite contributing positively to workforce needs in sectors like hospitality and healthcare, the rapid population increase has outpaced housing construction significantly. In Canada, the mismatch has resulted in heightened living costs and strained standards of living, prompting the government to curb immigration targets.

Mortgage Mastery: Navigating Renewals 🔄

Mortgage Mastery is our section where we break down important mortgage concepts, strategies and complicated sounding jargon into simple English and give you the means to get the best out of your mortgage requirement. In this edition, we’re covering mortgage renewals.

When your mortgage term comes to an end, it's not the end of the road—just a new beginning! Here’s what you need to know about renewing your mortgage in Ontario:

• End of Mortgage Term: When your mortgage term concludes, any remaining balance needs to be either paid off in full or renewed with another term. This is a standard process, as most mortgage terms (ranging from 1 to 5 years or in rare cases up to 10 years) are shorter than the amortization period (often 25 years).

• Renewal Notice: At least 21 days before the end of your term, your lender must send a renewal statement. This document includes all the terms and conditions, like balance, interest rate, payment frequency, and fees.

• Options at Renewal:

  • Renew with Current Lender: You can sign the renewal offer from your existing lender. This is often the path of least resistance but not necessarily the most cost-effective.

  • Negotiate a Better Deal: Use the renewal period as an opportunity to bargain. Discuss rate reductions or better terms based on your payment history and credit score.

  • Switch Lenders: If you find better terms elsewhere, consider switching lenders. Be mindful of any legal, appraisal, and possible discharge fees.

• Early Renewal: Some lenders allow you to renew up to 120 days before your term expires. This can be advantageous if lower rates are available or expected to rise.

• Things to Consider:

  • Financial Situation: Has your financial situation changed? Adjust your payment frequency, amount, and term to better suit your current needs.

  • Rate Type: Decide between a fixed or variable rate depending on market conditions and your risk tolerance.

  • Penalties: Understand penalties for breaking your mortgage early, especially if you plan significant changes like selling your home.

• Advice: If you’re interested to know more we recommend reading this excellent write-up by the Canadian Govt which also explains mortgage renewals. But as always, it’s always best to reach out and have a conversation with mortgage advisors like us to explore all options and secure terms that best fit your financial goals. 🏦👨‍💼

Understanding these steps can make the mortgage renewal process less daunting and more beneficial financially. Take control of your mortgage journey! 🚀🏠

Important: A staggering number of Canadian mortgages are coming up for renewal in the next 12 months. We’re already seeing renewals getting more challenging for some clients since the interest rate environment today is very different from what it was 5 years ago when most people got these mortgages. It is crucial to seek professional mortgage advice to ensure you navigate this environment correctly. If you or anyone you know is renewing their mortgage this year, please reach out as we can help.

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