A Mortgage Brokers view on rates and prices

Rob McLister is a mortgage broker and the editor of the informative Canadian Mortgage Trends blog.

He’s doing a livechat at the Globe and Mail answering questions about mortgages right now.

Yesterday they published his rather bearish opinion on the future of home prices in Canada, which may suprise you coming from a mortgage broker.

“Buying the same house will be more expensive this fall than this spring,” National Bank Financial’s Peter Routledge told the Globe and Mail last month. But analysts point to a range of factors that could moderate home prices in the next six months, including higher interest rates, growing supply, modest income growth and stricter mortgage regulations. Canada’s banking regulator is weighing new mortgage rules as we speak.

Rates are the biggest wild card and the No. 1 factor that could put the brakes on home prices. Higher mortgage rates immediately make it harder for budget-strapped buyers to qualify for a mortgage. That’s why – other things being equal – as rates increase, prices usually decrease.

So if home prices potentially face headwinds, does it really make sense to run out, compete with a stampede of other buyers and purchase a home?

Read the full article here and find the live chat session here.

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Xhdh
Guest
Xhdh

Oh yeah, we have resources. And we cleverly take our winnings and plow them back into resources.

Hey everybody I’m just doing my history homework, does anybody know what this term ‘Dutch disease’ means?

gokou3
Guest
gokou3

Thanks #64 Kook.

Interest Only
Member
Interest Only
Kook
Guest
Kook

@gokou3 Could someone post the link again please?

here is the link http://lower.yolasite.com/

VHB
Member
VHB

Sep-2013
Total days 20
Days elapsed so far 8
Weekends / holidays 4
Days missing 0
Days remaining 12
7 Calendar Day Moving Average: Sales 122
7 Calendar Day Moving Average: Listings 270
SALES
Sales so far 989
Projection for rest of month (using 7day MA) 1462
Projected month end total 2451
NEW LISTINGS
Listings so far 2312
Projection for rest of month (using 7day MA) 3238
Projected month end total 5550
Sell-list so far 42.8%
Projected month-end sell-list 44.2%
MONTHS OF INVENTORY
Inventory as of September 12, 2013 17232
Current MoI at this sales pace 7.03

No Noise
Guest
No Noise

@Softy #42

Are you reposting a 2 year old message? Otherwise, you are 2 years too late. hahahaha

kabloona
Member
kabloona

Canadian Business: Interest rates are finally rising. So where’s the housing crash? — Duncan Hood

http://www.canadianbusiness.com/blogs-and-comment/rates-are-finally-rising-so-wheres-the-housing-crash/

RateHikes
Guest
RateHikes

@48

“For the average outstanding mortgage balance in Canada (162K), that is $83 per month. It is manageable.”

Please tell us what the outstanding mortgage balance is in Greater Vancouver Area, and work your math & teach again.

S
Guest
S

Help!

You can check out assessments at http://www.bcassessment.ca. Click on e-Value and search for the condo address. Good Luck!

gokou3
Guest
gokou3

About 3-4 weeks ago someone posted a website that contains the complete MLS listings and price changes in the metro vancouver area over the past year. Could someone post the link again please?

s11
Guest
s11

@Son of Ponzi, that big mac analogy is better than any way I can explain it to anyone.

Manatee
Guest
Manatee

@ help,

If you’re feeling comfortable discussing numbers with her, I’d recommend showing her a good, detailed calculator for comparing buying against renting. Here’s a link to a good one. http://www.nytimes.com/interactive/business/buy-rent-calculator.html?_r=0 It’s not perfect and it’s for the US so there are some differences involved. However, it does a really good job of showing the sensitivity to things like interest rate or the rate of change in house prices. At the very least, it helps to put everything in perspective.

rp1
Guest
rp1

#51 He doesn’t know what a “dead cat bounce” is. Blackberry this winter was a dead cat bounce.

Son of Ponzi
Guest
Son of Ponzi

Let’s do some more Macanomics.
Many households have received a booklet of coupons with substantial savings on McDonalds products.
The coupons run out Sep 27th.
One coupon entitles you to purchase a Big Mac combo for 4.99, well below the normal price of about 7.50.
This coupon is akin to a interest hold that banks have issued.
What we can expect to happen now before Sep 27th is that Big Mac lovers will rush to beat the deadline and overindulge on McDonalds products.
And after Sep 27th, they will balk at paying the normal prices again.
Big Mac meet Vancouver RE.

Billy
Guest
Billy

Ponzi, are you stay at home dad?

Son of Ponzi
Guest
Son of Ponzi

The Depreciation reports will flush out the dogs, and give more power to the buyers, where it should be.
It will also keep realtors more honest in their description of the property.
No more “low maintenance fees”, “well managed Strata”, “build by reputable builder” etc.

snake
Guest
snake

Canadian home prices to drop 15% on back of mortgage rate rise

http://www.theaffluentboomer.com/

Son of Ponzi
Guest
Son of Ponzi

Question #48
Remember, prices are set at the margin.
The average price of a Big Mac during the last 4 months is irrelevant.
What counts is the price that people are willing to pay for the next Big Mac.

Turkey
Guest
Turkey

@Softy,

Depreciation reports are mandatory as of Dec. 13. Anyone buying now is a fool IMHO

And when that causes no meaningful price decline, on to the next theory that will not pan out.

Depreciation reports have nothing to do with price declines, except where the condo is rotten and it’s bloody well warranted. Buying a condo without a reliable assessment is a gamble; that’s why these reports are becoming mandatory.

…but, then, you already knew that, and you’re being deliberately obtuse. Gosh, I hope so anyway.

Question
Guest
Question

Why do Bears say things such as the following…

“Interest rates for discount 5 year fixed mortgage went up from 2.7% to 3.7%, a staggering 37%…housing is going to crash”

and not realistic statements like…

The rate rise from 2.7% to 3.7% increases ones’s mortgage payments by 11%. For the average outstanding mortgage balance in Canada (162K), that is $83 per month. It is manageable.

Is this not a reasonable question?

paulb
Member

New Listings 212
Price Changes 96
Sold Listings 118
TI:17232

http://www.paulboenisch.com

Village Renter
Guest
Village Renter

Lotsa RE agents offering free ipads or visa gift cards for referrals, happy to be living in the new wall centre false creek, oir place appears to be about $400.000 and we rent it for 1400, poor owner has to subsidize our home, plus we get free cable for a year, and the owners told us the condo was electric heaters, bit actually is gas hot water , so they will pay in higher strata fees, renting is cool fool

Softy
Guest
Softy

“Depreciation reports are mandatory as of Dec. 13.
Anyone buying now is a fool IMHO”

And when that causes no meaningful price decline, on to the next theory that will not pan out.

snake
Guest
snake
Son of Ponzi
Guest
Son of Ponzi

Help,
Depreciation reports are mandatory as of Dec. 13.
Anyone buying now is a fool IMHO.
200 maintenance fees appear on the low side.
Good luck.