It’s All About Inflation
Are the days of cheap money and deflation over? Interest rates continue to rise and are much higher than they were this time last year. Canada and many other countries are experiencing a concerning inflation trend. Housing, food, gas and much more have been rising steady and in some cases are becoming a real concern. At the last measure the inflation rate was at 5.7%; a rate not seen in 30 years.
Consumer debt has been recently reported at $2.8 trillion with 70% of this debt held as a mortgage. Increases in the interest rate not only increases the borrowing costs for many Canadians but can lead to changes in spending habits. I’ve seen reports showing that 75% and more of Canadians are spending less on such things as household items, dining out and buying less expensive groceries.
Decreased consumer spending can often curtail inflation, however; the inflation is being caused by such things we cannot control. (of course, this begs the question of why is the Bank of Canada increasing rates to try and control something they can’t?) Supply disruptions, employment behaviors and war are outside of our control and can all be very inflationary. Increases to interest rates (and taxes) will only add to these pressures.
Mortgage rates are surging higher.
I strongly recommend anyone considering a refinance to consider it now and not wait especially if you have other debts to consolidate. It may also be the time to consider converting a variable rate mortgage to a fixed rate. Mortgage rates are expected to rise significantly this year. The good news is this should reduce the impact of penalties charged by lenders to refinance or a full payout.
Special Announcement
It is with great pride and honor to announce two new alliances with two very successful professionals.
Bill Parsons (Formally a REMAX hall of fame recipient) is one of the most successful and experienced realtors in BC. Bill Parsons and I will be working together to help clients with their real estate goals. I’ve known Parsons for almost twenty years and I’m confident that his forty-two years of experience and success will allow me to exceed clients’ expectations and continue to deliver great results.
Rebecca Harrap (Mortgage Professional with Verico) is also one of the most knowledgeable and experienced mortgage brokers in Lower Mainland. My alliance with Rebecca will allow me to continue to provide mortgage and financing solutions to clients. Whether it’s accessing private financing or battling with the big banks, we now have better and more options for borrowers.
The latest real estate stats are out and prices continue to climb higher ……click her for latest report: Download the March 2022 stats package.
The BC Government is now set to amend the Property Law Act to allow a ‘Cooling off’ period allowing buyers to backout of a purchase contract. Only a few details are known at this time but more on this will be available in the coming weeks. The new law may have unintended consequences that may affect all parties to a real estate transaction; however, it looks like more of an impact to sellers than buyers.
This new law may not do anything to increase inventory levels or stop the increase in housing prices, but there will be more to report on this as we move into the Spring market.
Fixed mortgage rates are much higher than they were just a year ago. Fixed rates have basically doubled from the lows of 2020. Currently 5-year fixed rates can be offered as low as 3.59% and as high as 3.89% depending on lender and product. Variable rate mortgages can be offered as low as 2%.