Our Mortgage Predictions for 2019
As the year comes to a close, you might be wondering what 2019 is going to have in store for us in terms of mortgages. While no one can say for certain, here are some of our predictions for the coming year.
More variable rate mortgages at the start of the year.
With the stock market in turmoil and low oil prices, it is unlikely that the Bank of Canada will impose its 2.5 to 3.5 “neutral” interest rate anytime soon meaning we will maintain a three-quarter spread between variable and five-year fixed mortgages. The spread will be enough to make variable rates attractive. Later in the year, if the gap narrows, five-year fixed will become more popular again.
As there must be a federal election in Canada no later than October of 2019, it is likely that home accessibility is going to become a campaign issue. While the government may not go as far as easing the financial stress-test, it is likely that there will be some incentives introduced or enhanced for first time home buyers.
More online mortgage sales.
As more millennials pursue their dream of home ownership, it is likely that mortgage agents will begin conducting more of their business online and remotely. Regardless of the method of communication however, millennials will still want to have a personal contact with their mortgage agent to help them navigate through the ins and outs of their first mortgage.
Challenges for those with HELOCs.
Recently Canada’s two biggest lenders, RBC and TD announced that they were applying stricter rules to those who had home equity lines of credit (HELOCs). When you apply for a mortgage through either of these banks, they will assume that you will max out your HELOC even if you have never borrowed from it in the past. This is going to affect how much of a mortgage you’ll be able to get through these lenders. And if Canada’s two biggest lenders are applying this standard now, it is likely that others will adopt it in the future.
To avoid being unfairly assessed by a lender just because you have a HELOC, it will be prudent for home owners to work with a mortgage broker who can match them with a lender that is willing to look at the bigger picture.
If you are considering getting,
changing or renewing your mortgage in 2019, contact the team at Matrix Mortgage Global today.