How to weather the Interest Rate storm
As a mortgage broker of 36 years never have I seen the mortgage market in such a state of unknown.
I do all I can to keep informed for myself and my clients. I follow most major economists and read forecasts daily.
I attend seminars, zoom meetings, webcasts, and conferences more than I have in my entire career just trying to make sense and get some direction of where we’re going. I listen closely to what the government had to say as we entered into Covid and then seen the complete opposite come true from what they forecasted. I then heard them tell us rates would remain low for a long period of time, just to be followed by the fast increase in prime I have ever seen. Unfortunately, rates are subject to change without notice.
Of course, now everything is based on inflation. It’s the new buzz word, the new death sentence, so to speak. I get it, inflation is not good, and I need to stop spending and I have, but I learnt a long time ago that I can only control the controllables, so to speak.
What affects inflation is government spending, hire mortgage rates, gas prices, food costs and consumer spending. Along with a host of other things. So, from this list I can only control my spending, I still have to go to work, so I have to drive and heat our home, I have to eat, and the funny thing is healthy food seems to have gone up the most.
Finally, I only get to vote once every four years and live with the consequences. The government has now said we need to slow down our economy. What does this mean is layman’s terms? Job loss? I sure don’t see how this make sense as many new businesses have just started up after others losing their life savings from Covid closing them down.
Why am I telling you all this? It’s not that I’m trying to be a Donnie downer, because I am not. There are always benefits and opportunities in a downward real-estate market. But what I am really saying is, I care about my clients, they are people and they have lives to live. In some cases, children to take care of, so please be very careful, if you don’t need to purchase anything right now don’t. It’s time to take care of our needs and not our wants. Like all storms, this too will pass. The question I have come to discover is none of the experts can tell us when or how long the storm will last and what the aftermath may look like. But what I do know is from there, like all other time in history, we will recover, and real estate will increase in valve once again.
So here are some thoughts. A home is a long-term investment sometimes we must put things on hold. In other words, if your home takes 26 or 27 or even 30 years to pay off vs 25 or 23 is that the end of the world?
I see people now live longer and are working longer so why not take a little more time it’s not the worst thing that will happen to us all.
I think for some, it may even be a good time to borrow against some equity in your home to give you the extra funds to weather the storm. You can put this money into a TSFA and draw down on it when needed. So, it adds a few years, is that not better then dealing with all the stress that takes years off your life?
For some it may be a great time to buy, house prices are much lower than they were is late 2021 and 2022. I get rates are higher, but are they? When you look at history, 5 to 6 percent is good. Even I, the expert, paid 13% in the early 90’s. If you talk to some parents and grandparents, they may have paid 21% in the early 80’s. Your credit card rates are at 19 to 29% and have been for years and that did not seem to stop people from carrying balances.
Here’s what I have learned, when interest goes up, house prices go down and when interest rates go down, house prices go up. So, if we buy today and interest rates fall in a few years 3, 4, or 5 as we don’t know, the gains in valve may very well outpace the interest paid.
Every day I get a call from someone with a variable rate mortgage or someone with a line of credit asking what they can do, all I can tell them honestly if they can afford to weather the storm then they can hold on, if they can’t, they should thing of locking in or even selling and putting the equity to something more affordable. We all need to live to fight another day.
I had conversation with many clients about getting a part time job to offset the extra payments. I get it, who wants another job, but is it not work keep our home or putting our debt on credit cards that costs us over 20%? There is 168 hours in a work week. Keep your chin up and get on the grind.
Keep in mind, working with a mortgage broker can open doors that financial institutions like the major Bank in Canada, cannot. Feel free to call us at Key Mortgage Partners to learn more.
As a mortgage broker of 36 years never have I seen the mortgage market in such a state of unknown.
I do all I can to keep informed for myself and my clients. I follow most major economists and read forecasts daily.
I attend seminars, zoom meetings, webcasts, and conferences more than I have in my entire career just trying to make sense and get some direction of where we’re going. I listen closely to what the government had to say as we entered into Covid and then seen the complete opposite come true from what they forecasted. I then heard them tell us rates would remain low for a long period of time, just to be followed by the fast increase in prime I have ever seen. Unfortunately, rates are subject to change without notice.
Of course, now everything is based on inflation. It’s the new buzz word, the new death sentence, so to speak. I get it, inflation is not good, and I need to stop spending and I have, but I learnt a long time ago that I can only control the controllables, so to speak.
What affects inflation is government spending, hire mortgage rates, gas prices, food costs and consumer spending. Along with a host of other things. So, from this list I can only control my spending, I still have to go to work, so I have to drive and heat our home, I have to eat, and the funny thing is healthy food seems to have gone up the most.
Finally, I only get to vote once every four years and live with the consequences. The government has now said we need to slow down our economy. What does this mean is layman’s terms? Job loss? I sure don’t see how this make sense as many new businesses have just started up after others losing their life savings from Covid closing them down.
Why am I telling you all this? It’s not that I’m trying to be a Donnie downer, because I am not. There are always benefits and opportunities in a downward real-estate market. But what I am really saying is, I care about my clients, they are people and they have lives to live. In some cases, children to take care of, so please be very careful, if you don’t need to purchase anything right now don’t. It’s time to take care of our needs and not our wants. Like all storms, this too will pass. The question I have come to discover is none of the experts can tell us when or how long the storm will last and what the aftermath may look like. But what I do know is from there, like all other time in history, we will recover, and real estate will increase in valve once again.
So here are some thoughts. A home is a long-term investment sometimes we must put things on hold. In other words, if your home takes 26 or 27 or even 30 years to pay off vs 25 or 23 is that the end of the world?
I see people now live longer and are working longer so why not take a little more time it’s not the worst thing that will happen to us all.
I think for some, it may even be a good time to borrow against some equity in your home to give you the extra funds to weather the storm. You can put this money into a TSFA and draw down on it when needed. So, it adds a few years, is that not better then dealing with all the stress that takes years off your life?
For some it may be a great time to buy, house prices are much lower than they were is late 2021 and 2022. I get rates are higher, but are they? When you look at history, 5 to 6 percent is good. Even I, the expert, paid 13% in the early 90’s. If you talk to some parents and grandparents, they may have paid 21% in the early 80’s. Your credit card rates are at 19 to 29% and have been for years and that did not seem to stop people from carrying balances.
Here’s what I have learned, when interest goes up, house prices go down and when interest rates go down, house prices go up. So, if we buy today and interest rates fall in a few years 3, 4, or 5 as we don’t know, the gains in valve may very well outpace the interest paid.
Every day I get a call from someone with a variable rate mortgage or someone with a line of credit asking what they can do, all I can tell them honestly if they can afford to weather the storm then they can hold on, if they can’t, they should thing of locking in or even selling and putting the equity to something more affordable. We all need to live to fight another day.
I had conversation with many clients about getting a part time job to offset the extra payments. I get it, who wants another job, but is it not work keep our home or putting our debt on credit cards that costs us over 20%? There is 168 hours in a work week. Keep your chin up and get on the grind.
Keep in mind, working with a mortgage broker can open doors that financial institutions like the major Bank in Canada, cannot. Feel free to call us at Key Mortgage Partners to learn more.