It seems that spring has come and stayed throughout our summer season, and along with it, news that our economic recovery may not be quite over, but even with the terrible weather and not so great economic news there is opportunity for home buyers.
2010 has brought with it a time in the mortgage industry like no other. January through to the end of May brought with it a time that was absolutely crazy, so expectations were very high for the remaining months of the busy season.
At the beginning of this year, rates were still at historic lows, prices seem to have stabilized and there was a feeling that all was back to normal, economically speaking.
There were a few wrenches thrown into our gears though, such as Finance Minister Jim Flaherty changing some important rules, and the consumer confusion that went with it. I still have clients calling that think they need 10% or 20% down to purchase a home (there are still free down payment programs and all of the 5% down programs).
To add a little fuel to the fire, the banks increased fixed interest rates a full 1% in one month, as the economic news was flattering at the time – as were the forecasts!
Mortgage application flow was still strong but people it seemed were on edge, wondering what’s going on in the market, then nothing happened. It didn’t matter how much follow up a person did, how many reports one forwarded to try and educate your clients that opportunities are still available in the housing market. Mass confusion seemed to set in, as many of us were sitting on 20 or 30 pre-approved clients, but none were making any buying decisions.
Maybe it had to do with it being summer, but the weather proved that wrong. It still felt like early spring maybe even fall! The hot days that kept people out of the show homes and real Estate offices were so few, that one wouldn’t have even noticed those slower eight hot days we had.
Well it’s not official yet, but I’m calling an audible. Fall is here. Weather is dropping just like our interest rates. They are back down to the super low 3.69% – 3.89% range and just this past weekend four of my clients went out shopping and bought houses! They know it’s a buyer’s market. Super low rates and lots of inventory create for a buying extravaganza.
Here’s the thing. I’ve said before that we wouldn’t be seeing these ultra low rates ever again. I was wrong! They are here!! How long will they be here? If history points us in any direction, they were here for between four to six weeks before they crept up again (both times!) The 3.69% – 3.89% rate has been with us for about a week now and I hope it lasts longer than the summer we had way back in July.
It’s difficult to read the stock market bottoms and housing market prices but it’s definitely easier to read the bottom of the five-year fixed interest rate cycles. How so?
Well when we were going through the global economic crisis last year five-year fixed interest rates dropped to 3.69% – 3.89%. Then banks increased rates up almost a full point. Lets complete this cycle two more times and we are back down to 3.69 – 3.89%! Take this opportunity to buy in this market. It may well be the last one. Let’s just hope that the third time is not the charm.
The most difficult part of reading interest rates is forecasting where rates are going to be in the next three to four months or year from now. Let’s just hope they stay low. Just like the weather we’ve had most of the summer!
Jean-Guy Turcotte is an Accredited Mortgage Professional with his partners at Regional Mortgage Corporation and can be reached for mortgage information at 403-343-1125 emailed to jturcotte@regionalmortgage.ca or texted to 403-391-2552.
