Hard to believe it’s now 2018, and the new mortgage rules are now in place. So what does this mean for the housing industry?  Anyone with a down payment of 20% or greater will now qualify for around 20% less than that they would have qualified for in previous years. When you add this on top of an already slowing market and rising interest rates, we can expect to see a slight correction this year. Keep in mind, the market is cyclical, so corrections are a natural part of the housing market, and as always, it will rebound.

Fixed mortgage rates have been steadily increasing for the last 6 months and upward pressure continues to build. Most banks are now up around  3.49% on a 5 year fixed.  There are however still 5 year fixed rates available from 2.79% – 3.19% for many situations. In modern times, rates are determined based on down payment/equity, property value and type of transaction. The days of a one-size-fits-all mortgage rate ended at the end of 2016.

Prime rate is expected to increase further this year. This is leading to an increased popularity of variable rate mortgages.  Why?  Because discounts off prime rate have now increased to prime -1.25% (1.95%) which is the largest discount off prime i’ve seen in my 10 year career.  This rate is available for high ratio mortgages only, that is, those that are insured through CMHC, Genworth, or Canada Guaranty.