Written by Mark Kerzner, President & CEO TMG The Mortgage Group Do any of the following questions relating to our current economic climate sound familiar to you?
“Is now a good time to buy?”
“Am I carrying too much debt?”
“What will happen to the housing market?”
“Where are interest rates headed?”
“What will happen to the economy if the Bank of Canada increases rates?”
As President and CEO of TMG The Mortgage Group, I was recently asked to participate in some conversations about the current market conditions and some of the biggest factors influencing interest rates. Out of personal interest and for context, I reviewed some previous presentations I had made on similar topics in the past. While most of the questions above are common concerns we hear from clients on a regular basis, the list above was actually taken from a presentation I made in the Spring of 2012 -- 10 years ago! In 2012, we had already lived through the Global Financial Crisis, and there was certainly no pandemic, yet many of the same questions facing mortgage clients today were being asked then as well. Coincidentally, there were additional issues from 10 years ago that continued to resonate until recently, including;
1) Strong demand for our natural resources led to a higher Canadian dollar and the Bank of Canada signalling it would keep interest rates low;
2) Low interest rates led to high levels of borrowing, an active housing market and appreciating home values;
3) Concern grew over rising debt levels – including much discussion about debt-to-income ratios;
4) A focus on the importance of housing to the overall economy, given that 18% of all job creation was attributed to housing market growth;
5) Interest rates were considered to be very low (approximately 3.49% vs. the then-10-year average of 6%).
For many of you, the concept of ‘cycles’ in real estate is not new and you have already drawn on your past experiences when making determinations about the state of today’s housing market and where it may be headed. But for those of you experiencing your first decline in the housing market or rising interest rates, it can be both overwhelming and stress-inducing. The good news is that there is a wealth of resources—in the form of information and people—to help you navigate current conditions and support you. One of the best resources at your disposal is the experienced and steady hand of a mortgage broker. I believe that mortgage brokers are better informed and educated on the complexities of the economy and the housing market than ever before. In times of fear and uncertainty, a mortgage broker can offer advice, guidance and help you navigate these turbulent waters. Today, we are certainly living through times where mortgages, housing activity, home values, and interest rates are constantly making news headlines. With all the enhanced underwriting guidelines and ‘digitization’ brought on by the pandemic, mortgage borrowers are increasingly turning to brokers for their mortgage needs. Broker share is even higher than it was 10 years ago. This means a growing number of Canadian consumers are the beneficiaries of better advice and more options than ever before. The takeaway is this. A mortgage broker’s job is not to ignore the realities in which we are living. They won’t brush concerns under the rug, but they also won’t fear monger over the latest negative headlines. Their job is to bring reason and experience to the table to help today’s borrowers make informed decisions that are right for them.
Always happy to help, thanks for reading!
TMG The Mortgage Group