In a bid to save any money possible, there’s an interesting trend making the rounds in the local B.C. real estate market. More and more people are taking on shorter-term fixed-rate mortgages.
“We’ve seen a lot more three-year fixed rate terms,” explained Rebecca Casey, president of the Canadian Mortgage Brokers Association of British Columbia.
She points out that the trend first started picking up steam in early 2023 and it is now the primary choice for homeowners as many expect, and hold out hope, for interest rates to come down.
The Bank of Canada’s next announcement on interest rates is Sept. 4, however, Casey can’t predict where the market will head after that.
“There’s just no reason for them not to cut rates at this point. The general consensus, long-term, is that the ‘normal’ level of interest rates is expecting to see most fixed rates falling to the mid to high three’s, and low four’s — that’s normal. Eventually, we’ll get there. When? We don’t know, but hopefully in the very near future,” she told 1130 NewsRadio.
While the rate is expected to come down, Casey says that doesn’t mean the doors to the housing market will swing wide open.
“The bigger concern we have is, we have a major supply issue. There are just not enough houses for people who need to live in them,” she explained.
“We’re hearing from developers right now about their ability to complete projects and start new projects and with the cost of labour, with labour shortages. As there’s a rate cut, there’s just a little bit more room for qualification, so we see a little bit more activity for sure, but the bigger problem is we have a major supply and demand issue here and until that’s sorted out, we’re going to be in this constraint.”
When it comes to housing in Vancouver, one of the most expensive markets in the world, Casey is pleading with people to have some perspective.
“What I’m seeing is we’re not in this frenzied situation where we’re at 10 multiple offers per product per sale, but we are still seeing things coming in at full asking price, maybe a little bit higher and a lot of it depends on the marketing too,” she pointed out. “I don’t know how to answer if it’s a buyer’s or a seller’s market, because I think everybody’s expectations are a little out of whack right now.”
“I think sellers are hoping that they’re going to get more than what they paid for, and I think the buyers are hoping for a deal. We’re kind of in this weird zone right now where everybody has a different set of expectations.”
She has some advice for people already in the market and coming up for a renewal.
“Get somebody who is qualified to help steer you through that. You really want somebody who lives, eats, and breathes mortgages to help you find a solution. And for those who are on the sidelines and about to get into the market, I would be very diligent about your budget. Take some time, write out your expenses, and be realistic about the mortgage payment you’re taking on.”
Overall, she wants people to feel positive about where things are headed.
“As long as everybody can weather this storm, the other side of this looks very optimistic.”
–With files from Michael Williams