Real estate: Your guide to mortgages nearing renewal – what you need to know

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Real estate: What to expect as mortgages approach renewal



“Is Canada about to transition into a homebuyer’s market? With many COVID-era mortgages nearing their renewal dates, and various other factors influencing the real estate landscape, let’s explore whether buyers may soon hold the reins in their hands.

What is a Homebuyer’s Market?

In simpler terms, a homebuyer’s market is a paradise for shoppers. It’s where “For Sale” signs stay a while longer and prices are more favourable for buyers. In such a market, sellers are more open to negotiation, leading to better deals for buyers. The real estate balance shifts when supply outpaces demand, allowing buyers to be more selective and patient in their search.

According to the Royal Bank of Canada, major cities such as Toronto and Vancouver, as well as many Ontario markets, are showing signs of transitioning into a buyer’s market. New data from the Canadian Real Estate Association supports this, indicating that the sales-to-new-listings ratio has dropped to a 10-year low, a clear sign of a buyer’s market.

The COVID-Era Mortgage Landscape

With historically low interest rates experienced during the pandemic, homeowners enjoyed reduced monthly mortgage payments. However, the era of low rates is coming to an end, with mortgage rates climbing at a pace not seen in over 40 years.

The Canada Mortgage and Housing Corporation’s data indicate that more than 290,000 mortgage holders have renewed their agreements at higher rates, hinting towards a trend that’s about to gain momentum. A closer look reveals that, in the coming years, a whopping 2.2 million mortgages are due for renewal, nearly half of all Canadian mortgages.

Can Mortgage Renewals Affect the Housing Market?

The mortgage renewal phenomenon won’t just impact monthly payments – it’s bound to create a ripple effect that can shake the entire housing market. The CMHC estimates that average monthly mortgage payments could increase by an estimated 30 to 40 per cent, meaning Canadians would collectively need to find an extra $15 billion in their budgets to afford housing costs.

This increase could lead to more homeowners selling their properties to find more affordable housing, causing housing inventory to spike, and in turn resulting in a buyer’s market with increased competition among sellers.

Are You a Prospective Homebuyer?

Prospective homebuyers should approach the market with caution and patience. To truly understand if Canada is shifting towards a buyer’s market, paying attention to indicators such as inventory levels and average sale prices is key. Don’t rush – budget wisely, consider potential interest rate hikes, and understand your financial limits.

In conclusion, it’s clear that the real estate landscape in Canada is poised for significant changes. The potential transition into a buyer’s market, coupled with impending COVID-era mortgage renewals, make it crucial for current and prospective homeowners to be well-informed, financially prepared, and patient. The impact of these factors remains to be seen, but staying updated and analyzing the situation will be essential for navigating the evolving housing market.”



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