Canada just finished a federal election where really nothing changed. With the election results back, and a recent Bank of Canada update, what can we expect in the Real Estate and Mortgage Market?

Early in September, and mid-way through the Election campaign, the Bank of Canada made it’s sixth interest rate decision and announcement of the year. Once again, like the election, nothing changed. The bank rate remains unchanged since the rapid decline as an immediate response to COVID-19 in March 2020.

I know I have been watching the announcements with some interest to see the Bank’s best forecast for recovery from the Pandemic. As the Pandemic continues to hang around, and while Alberta and some parts of the country are experiencing a fourth wave, we continue to see it impacting our recovery.

Since June, we have seen a pullback of recent high levels of housing activity. This was expected and even appreciated by many would-be buyers. In the Alberta market, we are seeing fewer cases of multiple offers and more ability to negotiate on price or other terms.

We will continue to see low rates for a while. Both from the Bank of Canada, as well as in the fixed-rate market. I project we will continue to see 5-year fixed rates near 2% interest into next year. Variable rates are even lower, hovering around 1.5%, but now may not be the time to make that selection given the bank’s desire to raise rates as the economy recovers. While we can expect rates with the bank of Canada to remain stable well into 2022, I would be very surprised to see it last much more than a year from this fall.

During the election campaign, there was a lot of talk about the housing market. Portions of our great country are really unaffordable, so it is a relevant discussion for many. A few things we can expect to see over the next few years are a continuation of the great First Time Home Buyer’s Incentive program which adds to the down payment, reducing mortgage payments. We have seen some talk of a possible tax on capital gains for those flipping real estate quickly, but that won’t impact most homeowners who stay in their house a few years. There is also talk that the maximum purchase price for mortgages with less than 20% down payment is going to raise from $1 Million dollars to 1.25 Million dollars, with that cap being indexed to CPI Inflation going forward.

Now is still a good time to be in real estate, or get into things while they have slowed down a bit. With low rates and improved values, it might make sense to use some home equity for investment, renovation, or debt consolidation. For those looking to purchase, especially for the first time, the next several months will provide a great balance of low rates, and less demand – making your negotiation position stronger than it has been since the spring of last year.

As always, I hope to hear from you if you have any questions or are looking to understand how this affects you specifically! Until next time.