I’m a mortgage advisor – let’s talk about the elephant in the room

Well, what a year 2022 turned out to be. The elephant in the room seems to be that the buy market is dead. It’s not.

Properties still regularly come to market and are sold near asking prices. In short, people continue to move and list their homes with agents. The real problem is that the confidence of first-time buyers is very low, which has a ripple effect on everyone.

Combine this lack of confidence with interest rate hikes, not to mention soaring prices for gasoline, electricity and daily food, is it any wonder those who live with their parents are reluctant to cross not ?

That said, there has been a real positive change since the announcement of the new Prime Minister, as we see lender interest rates falling and some confidence building. There is still a long way to go, as previous reactions have created an influx of business for lenders who have maintained better interest rates for longer, leading to horrific delays in processing applications. That said, some lenders are processing applications in near pre-pandemic time frames.

I think some inventory and adjustments should be made by aggressive pricing when they can’t keep up with demand. When buying a home, it can be the difference between an agent and a seller trusting the buyer or not. Buying a home is stressful and it exacerbates things. I think lenders need to be held accountable going forward.

I’ve been asked more than ever this year “what do you think the property will do?” and “what do you think interest rates will do?” The honest answer is I can’t predict it and no one else can, not accurately enough anyway. There are too many variables.

I don’t see this horrific crash in house prices that is being rumored to be happening anytime soon. However, what I see is a market adjustment. I don’t think it can be backpedaled enough, due to the high loan-to-value (percentage of value of borrowed property) levels of borrowings taken in recent years.

My feeling is that there will be a 10-15% reduction in price at the high end, followed by a balancing out over time and an increase that brings it back to perhaps an overall net reduction of 5% . However, that remains to be seen and could change.

I think buyers will come back to the market stronger next year, and I think the real estate market will become less of a seller’s market, which it has been for a long time now. High house prices have slowed the market for first-time buyers, and the end of purchase assistance financing has meant for many a shift to shared shares and condominium options. Although often less attractive, these programs will be useful to many in gaining access to the property market.

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With returns on rental purchases shrinking dramatically, changes in taxation for landlords, and planned changes such as minimum Energy Performance Certificate (EPC) ratings, I can see small landlords selling property and it’s bringing back more options to those who are for the first time. buyer markets. You have to keep in mind that the market in every corner of the country differs, and it fluctuates even more between low-cost and higher-cost housing markets.

And then ? Well, I think with any secured loan, more than ever, the consumer needs to turn to the advice of an experienced broker and not make quick decisions. Planning smart now will help in the future. In January or February of next year, I think the lay of the land will be greatly improved and the interest rates offered by the banks might be lower than today because competition is still strong between them.

Would I buy right now myself? If I had to move, yes, I would still look. But if I didn’t have an immediate need, probably not, as I believe the New Year will provide better prospects for future house price and interest rate expectations.

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