Jay Fleming, Royal LePage Your Community Realty –
As co-founder of The Real Estate Guys and Royal LePage Your Community Realty, I have seen the Toronto market change on a dime multiple times. However, this year an unprecedented number of real-world variables are affecting our industry.
The biggest drivers in real estate are the current interest rate environment, inflation and future projections. Unfortunately, my crystal ball is clouded at the moment. With rising tensions in the Middle East (think oil/gas, a major factor affecting core inflation), two major wars and large numbers of new immigrants to the country, primarily to Toronto and Vancouver (think consumer spending), banks are becoming increasingly cautious on their lending practices. And let’s not forget the overall geopolitical tightrope and the “orange elephant in the room”.
Most people are looking forward to rate cuts, which could drive both buyers and sellers into active participation in the Toronto market. But when and at what speed that may happen will be driven by the Bank of Canada. Regardless of its timing and the degree of interest rate cuts, people still want or have to move (it’s called life). Changing circumstances mean some people want to upsize, downsize or move away; marital splits, career opportunities and losing a job also play a role.
If you are contemplating a move, you need solid advice and direction from your agent, and from your lender if you need financing, whether a conventional mortgage or a line of credit. Banks are taking longer for the pre-approval stage, so get that ball moving.
You are not locked into a lender that provides the pre-approval, as you or your mortgage broker can continue to shop around for a better deal. If your loan is coming up for renewal, you do not have to go through the stress test if you stay with your current lender. Should you move to another lender, you must qualify with the rate they are offering plus two percent. Typically a lender guarantees the quoted rate for 90 to 120 days.
On the flip side, if you are breaking your mortgage there will be a cost; make sure to get details in writing.
In addition to considering the interest rate, look at any other offered perks. For instance, my lender offers a normal pre-payment option (usually on the anniversary of your mortgage), and allows a double-up option for each payment applied directly to your principal. If your monthly payment is $1,000, you could pay $100 to $1,000 extra each time, which can quickly reduce the principal you owe.
I believe that the first two quarters of 2024 will be sluggish, but I anticipate the summer will see an uptick in volume across the board and, I hope, rate cuts. To take advantage of opportunities, talk with your agent or get a great team working for you. Be ready – the market changes on a dime.
Jay Fleming has worked and lived in the St. Lawrence Market neighbourhood for 20 years.
Contact: [email protected]