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Financing Your Future: A 2023 Mortgage Recap

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Year-End Mortgage Wrap-Up: Insights and Outlooks

As we approach the end of 2023, I wanted to take a moment to reach out and reflect on the year that has passed. It has been a year filled with both challenges and opportunities in the Canadian housing market, and I am grateful for the trust and confidence you have placed in me as your mortgage broker.

2023 at a Glance

 This year has seen various fluctuations in the market, influenced by a banking crisis in the US and Europe, continued interest rate hikes to combat inflation and government and regulator polices etc. Despite these changes, I am proud to say that we have navigated the market effectively, ensuring that your mortgage strategy aligns with your financial goals.

2023 Client Experiences

Throughout the year, I’ve had the opportunity to assist many clients with a variety of mortgage needs. From navigating refinancing and renewal options for better rates and terms, to aiding first-time homebuyers in securing first homes, and providing strategic advice for difficult pre sale closings, it has been a rewarding experience helping each client find solutions tailored to their unique financial situations.

2023 Housing Market Roller Coaster

The high interest rate environment gave us a slow start to the year. Most First Time Homebuyers were expecting price drops that corresponded to the increases in mortgage interest. This standoff was broken by the onset of the Banking Crisis in the US. The intervention by the Federal Reserve in the USA brough money into the economy and a quick drop in fixed interest rates. My purchase clients who I had prepared with a prequalification were able to capitalize on theses savings and managed to find their new homes early, before the market momentum had built. Those who were scrambling to chase the market for the most part lost out and were in the end put off by the higher asking prices in place by the Summer.

The effects of the Federal Reserve’s Emergency Measures were soon absorbed by the market we were back to higher and higher rates during the summer. The Fall market was quite slow for purchasers and I was busier guiding my clients through their renewals. The Housing Market Nationwide has been coming down since, and while we were testing peak values it the early Summer, the trajectory is now clearly lower.

Small Victories for Mortgage Renewers

As I always say, it never hurts to have a Mortgage Broker look into your renewal as early as possible and this year was no exception. I renewed several clients into 3 and 5 year fixed rates and I was able to beat the market rates by handling their application early (4 months out from the renewal date). In many cases, their lenders waited to the last month to offer them renewal terms and rates. By that time I had already locked in a lower rate and they were on their way to closing with their next lender.

The last months of 2023 brought worrying news of the Canadian Economy. GDP Growth is stagnant and per Capital GDP is falling. The “Soft Landing” talk has given way to hard conversations about the economic reality faced by Canadians. The effect of this has been money flowing out of Equities and into Canadian Bonds  which drops yields and along with it fixed mortgage rates. The last few weeks of 2023 have seen many clients’ rates dropping and more first time buyers considering making 2024 the year.

Looking Ahead to 2024

The coming year promises a very interesting I am here to continue supporting you in mortgage and financial goals. Whether you’re considering refinancing, buying a new property, or have questions about your current mortgage, I am committed to providing you with expert advice and personalized service. A possible Federal Election in 2024 could see a number of changes to how the Canadian economy is oriented. One of the biggest Mortgage News stories of the year was the “triggering” or not triggering of variable rate mortgage payments. The difference in lender policies for Variable Rate Mortgages became very start when various lenders fixed mortgage payments in an increasing rate environment. This led amortizations to ballon to infinity (interest only) and beyond (negative amortization). This is an enduring issue for many borrowers and the regulators have been very inconsistent in the legality and permanence of these policies. If the banks are forced to act to bring amortizations back down, we could see more housing supply as more mortgage holders will look sell their properties. Finally, the BC Provincial ban on non owner occupied short term rentals could see additional supply in the condo market as “hosts” need to decide whether to rent out long term or sell.

 

Geopolitical Woes in 2024?

With rates coming down many borrowers are now celebrating the end of inflation and a “Soft Landing”. I would advise caution in declaring the economy back to normal, as inflation is still above target. The world has many potential flashpoints and conflicts that can lead to shortages and inflationary pressures. For instance, as I write Commercial Tanker and Container traffic is under attack in the Bab El Mandeb Straight by Yemeni Houthi Rebels. This straight leads to the Suez Canal and is a major container route for Asia to Europe Trade. Another Belligerent in the region, Iran controls the Hormuz straight nearby, which 20 to 30% of the worlds crude oil traffic flows through. There is also the looming threat of a China Taiwan conflict looming over the world’s most productive manufacturing region. Any one of combination of these or other conflicts could push a weakening world economy into recession or lead to further conflicts. We very much live in an interconnected world and many of the products we consume and economic partners we rely on aren’t as distance from danger as we are.

Advice for 2024

In short, I’d like all of my clients to keep their finances conservative and disciplined, focus on avoiding unnecessary debts while paying down your mortgage. If we see another crisis emerge in the economy drop rates, we should discuss this and whether it is a short-term event or the beginning of continued discounts to borrowing costs. If we spoke this spring, you will remember that I did not see the affects of the US Banking Crisis as being particularly long lasting.

In the end we must strive to keep our financial future as much in our own hands as possible. As difficult as this sounds to a new buyer with little equity and a large mortgage, it still should be the ultimate goal of any homeowner. As we have seen over the past two years, interest rates can spike suddenly and if you happen to renew a large balance during this time, you can be stuck without many palatable options. Let’s remember that in Canada we all have mortgage renewals sooner or later and must take those opportunities to reassess financial health and prioritize goals.

I’m always delighted to discuss mortgage options with you. Please feel free to reach out to me at any time. My expertise encompasses a variety of mortgage types, including A, B, and Private, as well as different transactions such as Renewal, Refinance, and Purchase. I deeply value the trust you have placed in me over the past decade and am committed to assisting you in achieving your financial and real estate objectives in the future.

Additionally, I want to highlight that the high turnover rate in the Mortgage Industry often leaves many mortgage clients without dedicated support. Should you know anyone in need of guidance in navigating the mortgage landscape, I am more than willing to offer my expertise and support.

As we embrace the festive spirit of the winter holidays, I extend my warmest wishes to you and your family. May this season bring you joy, peace, and cherished moments with your loved ones. Happy Holidays and a wonderful New Year ahead!

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