2018 was such a ride for the Canadian Mortgage Market. The Stress Test was introduced and a higher interest rate was implemented. This year won’t be any different. Those wanting to get a mortgage, apply for a second mortgage, or get any other types of mortgage on their existing home loan should read about the following predictions to be better informed of possible changes in the near future.
Variable Rates Rotation
The Bank of Canada may reach its estimated neutral rate soon considering the decreasing oil prices and the recent changes in the stock market this year. This and the possible interest rate changes for those with variable rates can make more people gain more confidence about choosing a second mortgage loan with a variable interest rate. Then as the year progresses, better rates may be available again for those who’ll opt for a five-year fixed plan. What to do? Don’t forget to ask a mortgage professional which interest rate may be a better option for you.
Easier Mortgage Terms
Because 2019 is an election year, politicians may add easier mortgage and home loan accessibility to sway more voters. How that will fare in the long run will still depend on who gets to win or stay in office.
Bank Mortgage Sales May Decline
Those who need traditional and second mortgages want fast service with easier terms these days – something that is not usually offered by banks. Most borrowers will also go for a lower interest rate when offered an alternative. This is why private lenders are estimated to approve more primary and second mortgages than banks this year.
HELOC Holders May Face Tougher Rules
Both the Toronto Dominion Bank and the Royal Bank of Canada predict that those who have a HELOC and want a new mortgage on another property will have a tougher time this year. They may also max out their home equity line of credit when their mortgage application is evaluated. When banks assess whether someone may be able to afford a new mortgage or not, they consider all your other loans no matter whether you used your other loans or not. This means that those with an existing HELOC may qualify for fewer or smaller loans from banks. This may not be the same if approaching private lenders.
Lenders May Switch to More Cost-Effective Ways to Address Inquiries
A lot of banks and private lenders use bots to provide instant answers to people visiting their websites. The downside is that the bots cannot give individualized responses and can only reply back with pre-written ones. This year, better bots may be mobilized, which may result in lower operating cost which can mean lower interest payments for consumers. At any rate, better bots mean a lot of time saved for both borrowers and lenders.
Although the predictions above are based on past and current trends plus changes that are being rolled out for all types of mortgages, nothing beats getting your answers straight from mortgage professionals. If you’re interested to apply for a HELOC or need a second mortgage, don’t hesitate to contact us.