Prior to the start of the year, one sets his or her goals and strives towards achieving them and if all goes according to plan – surpassing them.
Even though those goals are set, one always wonders how it’s going to turn out, especially after the economic crisis of 2008. There are all sorts of reports and economist reviews out there that’ll tell us what happened and predict what’s going to happen.
This past year was no exception and the year was definitely fraught with turbulence.
The start of the new decade began with an excitement in the air with super low interest rates and those that had saved up some cash and maybe even begged mom and dad over Christmas for some help with their down payment, went out shopping for new homes.
Most were first time home buyers, some were trading up and some were also refinancing. Most of my clients were the giddy first time buyers; they come in fresh faced and eager to learn all they require to purchase their first home. Some come in ready like a race horse and buy their home within 30 to 45 days; others take their time and truly check out all of their options before deciding.
In February, the federal government announced some major changes to the mortgaging industry that have affected many Canadians.
The major changes were to increase the down payments on revenue properties to a minimum of 20% down, introduce a benchmark qualifying rate on variable or adjustable rate mortgage plans less than five year terms and if you were refinancing your home you will now require a minimum of 10% equity in your home as opposed to the 5% previously.
These changes came into effect on April 19.
RBC started a rate tug of war at the beginning of March that created five year fixed rates to tumble back down to the mid 3% range. Once all the lenders followed suit and loaded their vaults with pre-approvals, the five year fixed rate shot up at the end of March by 0.60%, then two weeks later they went up another quarter point and lastly another week later rates went up another 0.15% effectively increasing fixed interest rates a full 1.00% in only 30 days.
Rates went from 3.69-3.89% to 4.69-4.89% almost overnight.
This effectively turned the buying frenzy taps off, and one hoped that they accumulated a lot of clients with pre-approvals at those extremely low rates.
The months of April and May were busy helping all of my pre-approved clients with completing their mortgage for their new homes. But the following months of June, July and August even though I always busy at work, the end result wasn’t very productive as many people just weren’t going to the show homes or went out with realtors.
Looking back I should have golfed more.
In August many people were adjusting to the fact that rates may never get below 4% again and the phone lines heated up again. And after the September long weekend, it seemed that everyone needed a house before the snow flew, and the taps were turned on full blast again.
October was my best month ever, as the gifts of the 3.39%-3.59% rates were back and many took advantage of those times. And luckily the phones are still ringing today.
It’s been quite a roller coaster ride this year, and interest rates truly did define how it turned out. Nonetheless it was a fantastic 12 months and I can’t wait to meet my new clients in the coming year!
Jean-Guy Turcotte is an Accredited Mortgage Professional with his partners at Dominion Lending Centres-Regional Mortgage Group and can be reached for appointments at 403-343-1125 or texted to 403-391-2552 or emailed at jturcotte@regionalmortgage.ca.
