COVID and the housing market

[backmarkerducati]

Over 1 million mortgages will renew in 2025 . You’ll see the flames from outer space . My mortgage broker gal pal is predicting for sale signs like an American election . Big and everywhere.


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If all goes as is (expected cuts) I expect 5 year fixed rates in the 3s in 2025 with some shopping around. So maybe 1% to 1.5% higher then they are now and many--even most can likely deal with that. I think 2025/26 renewal people dodged the worst of it.

Now if things don't keep going as is and they raise rates or even just hold them....

 

[mimico_polak]

If all goes as is (expected cuts) I expect 5 year fixed rates in the 3s in 2025 with some shopping around. So maybe 1% to 1.5% higher then they are now and many--even most can likely deal with that. I think 2025/26 renewal people dodged the worst of it.

Now if things don't keep going as is and they raise rates or even just hold them....

Maybe…my parents mortgage (<300k) increased $400/month. That’s low.

My mortgage went 2.79 -> 1.1 -> 5.9 (980 -> 802 -> 1265 biweekly) on a <500k mortgage.

Many people have more than 500k mortgage / LOC so even 1-2% bump can be VERY painful for them.

Not only that, once the LOC lifestyle gets going it’s hard to step away from it.

I expect a lot of pain in 2025 unless rates drop hard.

If I can find a fixed in the low 3s and mid to high 2s I’m locking in.

Not taking that ride again.

 

[Priller]

If I can find a fixed in the low 3s and mid to high 2s I’m locking in.

I don't think there's a single forecast predicting fixed rates that low from legit lenders and without crazy penalty clauses. Most seem to be predicting fairly flat numbers, maybe a drop at most by a half percent from the low- to mid-4's available now. Add to that, the expected corporate tax cuts in the US (which the inevitable Conservative government here will likely try to match) will lead to running significant deficits, which will raise bond yields and stop fixed rates from going too low.

It's kind of a mixed bag for what I'm hoping for, as a strong economy will keep rates higher, and lower rates will only come if things are struggling. There's a pretty good chance that variable will be the way to go for the next few years if rates drop but bond yields stay high, but with global volatility growing (especially if Trump tariffs start to antagonise China in a major way, or they find a way to take control of Taiwan), I might prefer to play it safe with a higher fixed rate so I can sleep better...

 

[mimico_polak]

I don't think there's a single forecast predicting fixed rates that low from legit lenders and without crazy penalty clauses. Most seem to be predicting fairly flat numbers, maybe a drop at most by a half percent from the low- to mid-4's available now. Add to that, the expected corporate tax cuts in the US (which the inevitable Conservative government here will likely try to match) will lead to running significant deficits, which will raise bond yields and stop fixed rates from going too low.

It's kind of a mixed bag for what I'm hoping for, as a strong economy will keep rates higher, and lower rates will only come if things are struggling. There's a pretty good chance that variable will be the way to go for the next few years if rates drop but bond yields stay high, but with global volatility growing (especially if Trump tariffs start to antagonise China in a major way, or they find a way to take control of Taiwan), I might prefer to play it safe with a higher fixed rate so I can sleep better...

I agree. I don’t expect rates to drop down for fixed 5 year below 3% unless things really **** the bed.

There are smarter people on here and elsewhere that may know better…but I don’t expect to see those rates any time soon.

As such I’m sticking with variable for the foreseeable future. I doubt very much I’ll go back to 5.9% as a fixed rate (Prime of 7.2% at the peak).

 

[mimico_polak]

ChatGTP poos the bed...

Asked what is the prime rate at Tangerine...



Meanwhile reality is that it's 5.95%. Big difference.

So my current mortgage is 4.65% and equal a payment of $1120 or so bi/weekly. That's $144/biweekly already within the last few months.

So let's see what happens.

 

[GreyGhost]

ChatGTP poos the bed...

Asked what is the prime rate at Tangerine...

View attachment 70893

Meanwhile reality is that it's 5.95%. Big difference.

So my current mortgage is 4.65% and equal a payment of $1120 or so bi/weekly. That's $144/biweekly already within the last few months.

So let's see what happens.

AI models have serious constraints on new information. Their database is historic. More recent versions require paying. Afaik, none are remotely real-time. Part of its answer should have included the date it was considering but that would make it look less magically useful and hurt valuations.

 

[mimico_polak]

 

[nobbie48]

I'm still not convinced about the fire and brimstone. Yes, rates will be higher when they renew but 2-3% below the recent peaks. My mortgage went up $1000 at renewal. I suspect many more will have a similar bump (lower starting rate, lower renewal rate). It hurts but it's also survivable. If you sell after buying at the peak, paying LTT, paying RE agents and lawyers, you will be well underwater. Rent (on a much smaller dwelling) plus payments on the loan many would need to cover the shortfall (at a crap rate as it's unsecured) would exceed the monthly outlay for mortgage at the higher rate. Dumping toys/possessions can cover the cashflow issue for a bit.

A thousand dollars is bout $60 hours on minimum wage per month. You won't have any free weekends but you'll keep the house. Of course taxes will affect the numbers unless there is a mercy clause somewhere in the CRA. Haha.

The taxes may be covered by you not having any time to spend any money.

For more details talk to an immigrant

 

[POWERMAN]

I expect a lot of pain in 2025 unless rates drop hard.

Mine increased by $300 when I renewed 2 weeks ago.
4.25% fixed for 3 years. Just didnt want to take any chances for the near future lol.

 

[nobbie48]

Maybe…my parents mortgage (<300k) increased $400/month. That’s low.

My mortgage went 2.79 -> 1.1 -> 5.9 (980 -> 802 -> 1265 biweekly) on a <500k mortgage.

Many people have more than 500k mortgage / LOC so even 1-2% bump can be VERY painful for them.

Not only that, once the LOC lifestyle gets going it’s hard to step away from it.

I expect a lot of pain in 2025 unless rates drop hard.

If I can find a fixed in the low 3s and mid to high 2s I’m locking in.

Not taking that ride again.

When we bought our present house the rates were 13% but soared to 22% but came down to 12.5% at renewal.

When I bought my shop IIRC the rates were around 10%. We worked our arses off to pay down the principles.

Next on the worrywart list, read up on hyper inflation. Of course that could never happen here, just like double digit mortgages.

 

[POWERMAN]

AI models have serious constraints on new information. Their database is historic. More recent versions require paying. Afaik, none are remotely real-time. Part of its answer should have included the date it was considering but that would make it look less magically useful and hurt valuations.

It really pisses me off when I see people in the work place rely on AI too much.
Folks who barely manage to speak properly when in person somehow manage to copy / paste 'extravagant' emails with language one typically wouldn't use.

I have no issues with using AI as a guideline when coding or looking for some guidance when creating slide decks...but atleast have some dignity and make an attempt to use different verbiage lol.