Between the introduction on the financial stress test and rising interest rates, 2018 was a tough year in mortgages – and so far, 2019 isn’t shaping up to be much different.
Here is some of what we can expect on the mortgage front in 2019:
A decline in housing sales.
A forecast by the Canadian Real Estate Association is predicting that double digit declines in housing sales in 2019 – the lowest that they have been in five years. Even though the population is growing, recent polies by the federal government have made it more difficult for people to get mortgages. Along with declining sales, it is expected that we will see declining house prices. The CREA, projects the average house price to fall to $488,600 in 2019 which is down 4.2% from 2017’s prices.
A housing slowdown.
Naturally, if there are less homes being sold, there are also going to be less homes being built. The Canadian Mortgage and Housing Corporation forecast that housing starts will fall by a range of 194,000 to 204,500 units.
Little change in interest rates.
The Bank of Canada raised its interest rates multiple times in 2018 and there is a good chance that we will see one or two more hikes this year, however with the decline in borrowing many economists are predicting that five year fixed rates will remain more or less flat, and by the end of the year we could even see a rate drop.
Modest price increases.
Some real estate brokerages including Royal LePage and Re/Max are predicting home prices to go up slightly over the course of the year. The forecast by Royal LePage is predicting a 1.2% increase in the median home price while Re/Max is predicting an average increase of 1.7% nationally.
What does all this mean for you?
Overall, the outlook for home buyers in 2019 does not look a whole lot different than it did in 2018. Qualifying for the financial stress test could be a challenge for many, especially in the light of recent increases to the Bank of Canada’s interest rates.
The good news is that mortgage brokers like Akal Mortgages have many different tools at their disposal to help Canadians qualify for a mortgage and get into the home you want.
If you are interested in applying for a mortgage, don’t let current economic conditions stop you from learning about all your options. Contact Akal Mortgages today.
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