My Mortgage Blog

Sales volume remains low in the Calgary Real Estate market, not just compared to last year, but also compared to long-term averages. The good news is that prices are fairly flat. Why is this good news?

For sellers, that answer is obvious. For buyers, why might they not want to see prices drop? How confident would you be buying a home, when prices are on the decline?

Those of us in the industry need to ensure we talk about Real Estate purchases as long term investments. Values will increase and decrease, provided the long-term trend continues upward, that is what is important.

I've seen a lot written about the new mortgage qualification rules and higher interest rates are to blame for buyers putting on the breaks. Is that what you're seeing an hearing?

A couple of thoughts on that vein: the rules aren't going away anytime soon and as interest rates increase, so will the Bank of Canada Benchmark rate. This is the rate that all borrowers need to qualify at. As we saw yesterday, that rate increased from 5.14% to 5.34%. That's the fifth increase since last May!

If borrowers think that rates will decrease and qualifying will get easier, they may want to think again.

The good news for buyers is that there is finally inventory to choose from, something we haven't seen in a few years.

As for rates, we are not only seeing the Benchmark Rate increase, we're seeing both posted and discounted rates increase. It seems like everyday I'm getting emails from a lender telling me this or that rate/term is increasing.

While the posted rate isn't typically what a borrower pays, they most certainly have an impact on the penalty calculation when it comes to breaking your mortgage. At a glance, it seems that the banks are upping their posted rates in order to be able to cash in on a higher differential down the road. It could also be an attempt to handcuff clients by making it unthinkable for them to go elsewhere because of the high cost.

Remember not all lenders have a posted rate. Securing a mortgage with a lender that does not, could be more advantageous now, than ever.

Looking forward, the next Bank of Canada overnight rate announcement is May 30, 2018. What will happen at that announcement? No one is talking about it just yet. After their last announcement in April, it looked like we wouldn't see a rate increase in May, or maybe even June. Only time will tell. Stay tuned on that front!

I'd love to hear more about what your thoughts are on the Calgary Real Estate market. Where you see things going both short and long term? Let's have coffee!