Dear David,
We purchased our home three-and-a-half years ago when interest rates were at their lowest point, and have a five year mortgage. We love this neighbourhood, but are quickly outgrowing our house. We want to move to something larger. What is your opinion about upsizing to a larger property now that interest rates are coming down? – FEELING THE SQUEEZE
DEAR SQUEEZE: This has been an interesting year, with considerable unrest in both the real estate market and the world at large.
When inflation started taking off, many buyers who were thinking about moving stepped back to the sidelines and adopted a wait-and-see approach we haven’t seen from the public in quite some time. As of this week, the Bank of Canada has dropped interest rates for the fifth consecutive time in the last six months, which is great news for buyers and sellers. Affordability is everyone’s number one concern no matter which way you size up the market. While my crystal ball is a bit cloudy, it’s still predicting a stronger real estate market in 2025, even with slightly higher unemployment.
Attractive interest rates tend to drive the real estate market. Lower rates make mortgages more affordable, and homeowners (along with prospective move-up buyers) are often less affected by higher levels of unemployment. I expect we’ll see the real estate market come back to life in the first quarter of 2025 as rates become more palatable. With a year or so remaining on your mortgage, most banks will allow you to port (move your existing mortgage) over and blend that lower rate with the more attractive rates we should see early in the new year. Positive change is on the horizon,making this a good time to have a conversation with your mortgage specialist.
When a mortgage renewal is looming, the question on every homeowner’s mind is whether they should commit to one, two or five years. In most cases, the answer depends on their tolerance for the current level of economic uncertainty, and their expectations for where they anticipate being by the end of their next renewal term.
PRO TIP: Whether you’re a first time buyer or upsizing to a larger home, the best time to move is when you’re ready and have your financial ducks in a row. As the real estate market wakes up in the next few months, there’s a strong possibility that prices will start to rise.
All signs point to further interest rate decreases in the coming months, but regardless of what the market is doing, buying and selling in the same environment takes the edge off market conditions. Lower rates tend to drive higher prices as buyers sitting on the sidelines hop back into the real estate arena. Speak to your mortgage specialist before you make a move, so you can understand your options. Having that information well in advance will help you sleep better at night. #Advice #AskDavid #TheNegotiator
David is a top-selling Broker in Kitchener-Waterloo Region. He works personally with you when selling or buying your home. Call or text today for your free home evaluation! 519-577-1212
