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A Surge of Optimism

Posted on 2019-11-29 17:05:21
Tags: bank of canada, canada housing market, Toronto, gta, mortgages,
Author: Bob Aggarwal

The GTA housing market has been interpreted many ways by experts and homeowners. Some see potential in the market while others are expecting a decline to occur before the market gradually gets stronger. Overall, a positive market view has surfaced leaving the fear of the bubble in the rearview mirror.

There is a sense of optimism, which began in late 2017 and could carry throughout the year. What is causing this optimism and is it founded?

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National Housing Market

Confidence in Canada’s housing market is gaining, fueling a renewed optimism for the GTA. Homes in Toronto and its surrounding areas, which are experiencing constant development and enhanced infrastructure, could increase in value. This does come with a shift to long-term thinking and less concern with short-term gains.

Supply vs. Demand

Toronto is still experiencing a shortage of supply, which will drive the market. The optimism is due in part to demand leading to higher sale prices which will increase the average house cost.

There also doesn’t seem to be a lot of public backlash towards the new stress test. This could present a small speedbump but it shouldn’t curb the market. It is designed to protect lenders, which can help the market by vetting borrowers. This could improve the market without slowing it down.

Suburbia

Areas like Thornhill, Oakville, Richmond Hill and Aurora have been attractive to homeowners for a long time. Their continued investment in infrastructure, evidenced by the York University subway line, and fair pricing will drive more people to suburbia. This will sustain the peripheral markets if central Toronto experiences any dips.

A Healthy Economy

In the broadest sense, there’s no bigger reason for optimism than the economy. The economy is expected to grow 2% in 2018 and further growth is forecasted for 2019. Unexpected downturns can be expected and there are variables—the minimum wage increase, inflation and the growing tech sector—but the economy is headed in the right direction for now.

There are legitimate reasons to be optimistic about the GTA’s housing market in the near term. All Canadians are hoping that it proves to be true.

Questions to Ask a Lender

Posted on 2019-11-29 17:24:40
Tags: canada housing market, gta, mortgages, housing market, mortgage approval, mortgage lender,
Author: Bob Aggarwal

In your search for a mortgage, you should meet with several lenders to interview them and discuss the terms and process. During this time, you need to properly gauge the terms they are offering and the advice they are giving to guide you through the process. Not all lenders are created equal and the key is to come ready with the right questions to ask.

Here are three questions every applicant should ask a lender during their first conversation.

How to Decide Between Fixed or Variable Interest Rates?

One of the biggest decisions you will make, outside of choosing a home and making an offer, is what type of interest rate to choose. Your lender must have the market knowledge and a sense of how the banks will act to guide you to the best decision for your situation. There’s no one size fits all.

A fixed interest rate means the rate will stay the same throughout the duration of your mortgage. This is a good option if the rate is low and there are signs that it will spike at some point. A variable rate is volatile and can increase or decrease based on what The Bank of Canada does. Typically, you are signing up for a higher rate with the hope that it will drop at some point, meaning you can put more towards the principle.

Can I Pass the Mortgage Stress Test?

The stress test has been a popular point of discussion since late 2017. Every lender you meet with should outline the parameters of the stress test. They should also honestly evaluate whether your application could pass with flying colours. A lender should acknowledge when an applicant could have trouble passing the stress test and then offering advice on how to better their application.

What’s the Pre-Approval Process?

Finally, inquire about the steps it takes to be pre-approved for a mortgage. Your first conversation with a lender should give you the tools to prepare the best application, as these things are rarely straightforward. Get a list of everything you will need so that you can create a comprehensive checklist. Be sure to ask if there are any tips that can help you get approved.