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your mid-week mortgage market minute
with Jim Cook, Broker
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in the mortgage marketplace ...
If you haven't heard, the First Time Home Buyers Incentive (FTHBI) plan will be cancelled effective March 21st.  This was a shared equity program with qualifying criteria that was so difficult to meet, that this program never really took off.  Only 33% of the budget earmarked for the program was used and there were just 23% of the expected first time buyers who received funds.  My point is that you can likely pass by any headlines around the removal of this program - it won't have any impact on buyers in your client list.

There is a lot of discussion around inflation and where it is headed in the coming months.  Much of this is starting to feel like folks trying to fill space and provide content, in lieu of having something more interesting to talk about.  We could talk about expectations in the US and how they will correlate to Canada - that inflation is a self-fulfilling prophecy - that shelter costs continue to be the biggest contributor to Canadian inflation numbers and that 400,000+ new permanent residents expected by year end will increase demand for goods, services and housing.

But I think we can keep this simple.  Every indication is that inflation is headed in the right direction - that we will see rate reductions in 2024 - that the earliest BoC policy rate reduction is likely early summer - and that real estate will continue to be top of mind of all Canadians because it's part of our culture and the threat of rate increases is largely in the rear view mirror.  Finally, that we are early in what should be a two year slide in rates - but that the rate premium on any mortgage rate under 3 years is silly at the moment, so 3 yr fixed rates, or variable with the right discount off Prime and the right risk tolerance, are the likely best approaches for those taking a new mortgage at present.

FYI - the next BoC rate announcement is April 10 and the current implied chance of 'no change' in rate for that meeting is 77% - with a year end 2024 policy rate 1% lower than it is now.
rate snapshot ...
We are seeing nominal reductions in some term lengths. Unfortunately, the sweet spot 3 yr term rate hasn't budged.  For properties priced below $1 million, with less than 20% down payment, example rates would be:
  • 1 yr fixed  6.64% or $6.78 per $1k in mortgage
  • 3 yr fixed  5.14% or $5.90 per $1k in mortgage
  • 5 yr fixed  4.99% or $5.81 per $1k in mortgage
For clarity, a $500,000 at 5.09% on a 25 yr amortization would have payments of 500 x 5.87 = $2,935 monthly.

Note also that rates can change daily, certainly differ between lenders and definitely differ based on down payment, mortgage features and hidden costs.
in Jim's practice ...
The start of this year is behaving much more like a classic or conventional demand year - unlike those years influenced by COVID.  The last week of December through January we saw seriously motivated buyers step up and a number of folks looking at debt consolidation - what used to be coming to terms with Christmas spending - and lately  more about how do we lower our monthly budget as rates/grocery expense is much higher than it was.

February - great time for holidays - as evidenced by the number of Realtors posting pictures on social from various places across the planet.  We had typical February volumes - consistent activity but certainly not overwhelming.

Then came March 1st and someone flicked a switch.  Granted we were away ourselves for the last week of February and first week of March, but there is definitely a surge in activity and interest and pre-qualifying requests and folks looking more seriously at purchasing - both first time purchasers and those trading up.

Note - our request to clients to help us boost our ratings and reviews was an unqualified success - we are now over 120 5-star reviews on google and growing - more than double of any other mortgage agent/broker in the broader region.  

Have a successful week!  
Great experience with Jim. He gives his honest advice and opinion on mortgage options and is not pushy at all. Jim even gave us advice that would cost him his fee because it was a better option for us. I would highly, highly recommend him to anyone looking for a mortgage.
(TK, J\\Feb 2024)
chatwithjim.ca

the best place to refer clients to get questions answered quickly!  No Phone Tag.  They book directly into my calendar to schedule a call!
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Jim Cook is a nationally-recognized broker with some quarter billion in mortgages funded. 
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