It might be the end of summer, but we’re already thinking about what next year will bring to the real estate and mortgage markets! 
Although the housing market is brisk today because there are more buyers than sellers, we’re likely going to see changes next year. Remember, real estate is not a “get rich quick scheme” – it requires a slow-and-steady strategy. 
Brace yourself – it’s going to be a bumpy ride
We’ve all read that home values are higher than they were last year – because of the continued issues around demand and supply. Low mortgage rates are exacerbating the issue because more buyers can get approved because lower rates mean lower payments for the same loan amount. About three weeks ago the Bank of Canada forecasted out rates for the next year. This is an unusual move, but they were looking to add some degree of certainty to an uncertain world. In their look ahead, they expect the over-night lending rate to be low and stable until 2023.
Earlier this year, Canada Mortgage Housing Corporation (CMHC) predicted that home values across Canada would depreciate as mush as an alarming 18% in the next 12 months. While this is an average across the country, the softening home values will have an impact on people’s ability to refinance as there will be less equity available.
So what does that mean? 
For those individuals who have job stability and debts they should be proactive and look at consolidating their debts into their mortgage now. Why? Rates are good and wrapping your debts into your mortgage will help you preserve your credit history. The value of your home may be “puffed up” now – so you can get the maximum amount of equity if required. 
Some clients have lost jobs or recently become self-employed and been disappointed because they found out they no longer qualify for a AAA mortgage. We were still able to get them a decent rate as even with alternative mortgages, the mortgage rates are still good. Five percent is significantly better than 18%!
Variable Rate or Fixed Rate? This is one of the most common questions I’m asked.
Most people ask us “what should I take – variable or fixed?” I wish there was a simple answer. My recommendation is that if your debt-to-income ratio is low and you still find you have money at the end of the month, the variable rate is likely the best option for you. Right now variable rates are a little lower than fixed rate and they’re expected to remain low until 2023. 
You’ll pay a 0.25% premium (approximately) on a fixed-rate mortgage. The certainty in the interest rate is worth the premium for about half our clients, (especially if they’re purchasing their first home or expecting changes to their incomes in the future). I just renewed two mortgages on my rental properties and I went with a fixed-rate, and the mortgage on my home is variable-rate.
Understanding the fine print on a mortgage 
I receive calls/emails on a daily basis inquiring about “what’s our best rate”. It’s obviously our goal to help all of our clients get the best possible rate they are entitled to. As mortgage financing becomes more complex, so do the rates a client qualifies for. 
As you may know, we do mortgages through national banks, credit unions, and a whole host of other financial institutions. The most overlooked part of a mortgage is the finer details that can cost you significant money down the road. Some of which include penalties. Rates will also be higher on different properties such as rentals, cottages, and secondary homes. 
For a closer look at decoding the fine print, watch my latest video for my best tips:
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